As far as public emergency services go, currently most of America uses privatized fire protection and EMT services, the municipalities I've worked with are often firm in their beliefs that these privatized services save their tax payers money (http://reason.org/files/c2bbfe415eccfdff424a2bf7c8a20585.pdf). But this is the result, they cost less money because they make the hard choices the county itself, for a multitude of reasons, can't make. No Fire, EMT, or police service could ever guarantee their services, by necessity they operate like an insurance program; everyone pays in with a very small minority on any particular day actually needing the service. If conditions occur outside of this model such as large wide-scale emergencies that exceed the capabilities of the local fire, EMT, and police departments we have another layer of insurance, local emergency planning and coordination committees and inter-district aid agreements commit the resources of neighboring counties/states, and beyond that the national guard and the red cross can provide relief efforts to stressed local emergency services.
Here is the kicker though, all these layers of protection, all these buffers against worst case scenarios cost money. As far as I can tell good intentions don't pay for the upkeep, overhead, and salaries of emergency services. If you don't agree with how things are run or you know of a better way to do things then the proper answer is not to refuse to pay your bill, but to become active in the local community and actually change things. It's not particularly difficult, few care enough to actually commit their time so competition generally isn't a factor.
This fire department likely performed a cost-benefit analysis at some point and determined which areas were high-hazard areas for the spread of house fires and which areas were low-hazard areas for the spread of house fires, and it sounds to me like this guy lives in the low-hazard area. When we as the tax paying general public want to pay lower taxes then cost cutting measures like this are the result. Granted I'm biased, I don't have a problem paying my county fees and taxes but truthfully I don't see anything wrong with refusing service to people that refuse to pay for it. It's not the fire department's fault when you lose your house and dogs to the fire you allowed your grandson to start right next to your house when you hadn't paid your taxes. This isn't just some random event, a is the conclusion of a series of poor decisions by the home owner which led him to his current circumstances, he has no one to blame but himself.