Which scenario has the greater cost/revenue benefit? (thus allowing for lower costs to consumer):
1) Wiring up and connecting 5 towns in a 100 square mile radius, each with a population of 10,000 people. That line you run out to each town services 10,000 people each!
2) Wiring up and connecting 5 towns in a 100 square mile radius, each with a population of 1,000 people. That same line to each line only services 1,000 people.
Both scenarios require similar amounts of infrastructure in place, but one scenario offsets the cost with more revenue. If you can do that, you can lower the cost per customer... Higher population density = more revenue/cost.