Have you ever bought anything from someone that produced it face to face? Because it really isn't about how 'expensive' it is, that's a given in the transaction - materials have cost. It's about the 'how much extra is this worth?'.
This guy is looking to make a profit, no doubt, but doing so by providing a service where the big telecoms have said there is no profit to be made. I hope he does well, and I hope he makes his way to NoVA (Northern Virginia) 'cause I'll sign up just to support diversity - even if I keep on with my higher level service.
What is profitable for a "Big Business" is gratuitous for most townships in the US of A. The margins most that business runs on at that level are so small that only the scale keeps them from falling apart. What do we get as the consumer? Cheap goods, crap support, but we get a great price from a locked in provider.
Hell, I love my FiOS, but I'd ditch it in a heart beat if someone local could give me similar speed and no Verizon tech support. Or billing dept. run around... Unfortunately, the entry cost is too high in the metro areas, so small companies have to start in the cracks...
tl;dr - Guy sees a market and is going for it where big business isn't. He must be evil.