While it seems like the federal government is out of line taking the right to govern away from the states, in reality it is the states that are taking away the right to govern from local governments that ACTUALLY WANT municipal broadband.
Ensuring that municipalities maintain their rights to roll out local broadband isn't a perversion of states rights, its preventing states rights from perverting local rights.
There is no such thing as "local rights". The federal government has 8 areas where it can legally legislate based on Article I Section 8 of the Constitution. Everything else is within the purview of state governments. This is where the concept of "states rights" comes from.
Your confusion stems from seeing the relationship between the federal government and the various states as being similar to the relationship between a state and its local municipalities. These relationships are - in a legal sense - totally different. A state can dictate anything to local municipalities. In TN, for example, the state just proclaimed that the cities can no longer ban guns in city parks. They can do that.
The federal government, on the other hand, has no such authority. Typically, they then wield power through funding. As one example all states have a minimum age for alcohol consumption set at 21 because the federal government will withhold highway funds otherwise.