The Universal Service Principal is hardly a common concept yet there is the capability of other countries to allow competition both at an infrastructure and access level. I think you will also find that there is absolutely no USP for internet access above an abysmally low level.
More fundamentally though I do not understand why you feel there should be no competition at a municipal level. A township has no requirement, legally or morally, to support a different township through subsidisation. And that is exactly what you are arguing by saying the cash cows need to exist to fund other areas. If a local government feels that its population is being inadequately served then it actually HAS the moral imperative to fix that if it can. Now if it invests in infrastructure which it then operates itself or sells to a private entity and as a result improves the standards for its constituents it has done EXACTLY what it exists to do.
The fact that there is corruption in any organisation, or that the decision on what to build may not have been your choice is a completely different argument all together.