The very reason governments justify their funding of projects like fiber optics is because such things could easily become expensive. Why would a private company spend so much money on laying the cable for a network that would benefit the public, but might put the company out of business? The truth of networking is that the most expensive thing tends to be placing the wiring. Cable TV is fundamentally a federal project, given how many subsidies went into laying the cables. Granted, this was because the wireless options (antennae) were insufficient to meet the demands of rural areas.
But this is no longer a problem. 802.11g ("WiFi") and upcoming wireless protocols are fast approaching speeds that cable networks offer, and is significantly cheaper than wiring a building. Satellite TV requires only a single object in the sky--no subsidies there--and offers what would be a cheaper alternative to cable if it weren't for those nasty subsidies.
But in the short-term, it is hard for the government to look forward and have faith that someone might privately create a solution. Legislatures pat themselves on the back all the time about faith in the market. But when the market hasn't already solved the problem, they promptly try to solve it themselves, with projects like Iowa's little network.