That is one point of view regarding government, but there are others.

In this case I would say that the more relevant point of view is this: A government's purpose is to use the resources available to it to provide as best as it can for its citizens.

That is exactly what this city government was doing. The first attempt to do so included its corporate citizens, an attempt to utilize and provide for a corporate citizen while providing for the normal citizens as well. The corporate citizen decided against benefiting from that help.

The government moved on with a plan to benefit all the other citizens, and now the corporate citizen is trying to stop the government for providing for any of its citizens.

And that is where the corporate citizen is completely in the wrong. Not only did it opt out of getting greater benefits before, but it could still lease bandwidth in the new system to remain competitive. Their profits won't be as high as if there were no competition on the fiber network, but they can still make a profit. Instead, they want to interfere with the proper role of government so they can maintain their profits (or expand them) at the cost of the other citizens.

From this point of view, the corporate citizen is clearly doing wrong to both the government and the citizens that that government is responsible for. In that point of view, the corporate citizen should be removed from where it can do further harm to that government and its other citizens (much like how we send people to prison when they assault other people).

Hopefully, the courts will also see things from this point of view and act appropriately.