The real target here was the federal stimulus money (NTIA, BTOP) that was being used to create coops in Wisconsin. The Building Community Capacity through Broadband project
which would have connected together anchor institutions (city and county governments, libraries, schools, hospitals) and allow them to buy bandwidth wholesale rather than retail. That did not sit too well with some telecom folks and in the press they are saying that the University should not compete with the private sector. Well the University has to get bandwith in most of the state anyway to feed the various Univ of Wisc campuses. So including some school systems in the process makes sense if you believe in efficiency and cost savings. Gov Walker is "open for business" so he does not believe in government efficiency.
WiscNet was, as I understand it a secondary concern, although the telecoms have wanted it to die for a decades. It is the same pattern of schools banding together and riding together on common infrastructure. ATT would like that to go away with WiscNet in favor of Badgernet which they run or even better, from their point of view, to sell everyone T-1 lines retail.
This is the second effort for this. The first successful effort (from ATT's perspective) was to give back $37 million of the same stimulus money (NTIA, BTOP) for a different state run project. The spin there was that the Feds did not want to give the money to a private company. But insiders tell me that it was not the feds but ATT. (