Funding for municipal fiber to the home should be provided in the form of guarantees for bonds issued by towns and cities, which would finance the deployment of fiber networks. The towns would either lease the local fiber networks to operators who would charge for access to the network (with strict regulations on minimum service requirements and maximum fees), or contract a network operator to manage the network, and then charge residents directly for access to the network, to cover the cost of the network.
Since there is no economic justification for more than one fiber network in a community,the network should be owned by the residents, not a private entity. Operation of the network should not be managed by the town directly, but could and should be contracted to third parties, under 5-7 year competitively sourced agreements (this would allow enough time for operators to amortize the expense of equipment they will need to install).
A publicly owned network will enable all kinds of services to flourish, as everybody would get very high speed (! Gbps) connections, allowing anyone with a server to offer a service - whether voice, video, a web site, or just e-commerce. Each town, city, or county would be able to build the network best suited to its population and geography. The federal government would only be involved by guaranteeing the bonds, and by making the interest tax-free.
The telcos and cable companies do not want to make the necessary investments to provide real broadband, so they should not be rewarded with government financed monopolies in next generation services. They have access to capital today, but choose not to invest, as they do not view nations with more efficient infrastructures as their competition, but rather choose to compete with each other via fear and exaggeration based marketing campaigns.
A healthy economy is dependent on an efficient infrastructure - power, transportation, roads, water, and now just as important - communications. Wile the US created the internet and much of the high speed communications technology was developed here, we have fallen far behind other nations in the use of this critical technology. The self-interests of the incumbent internet access providers do not align with the interests of the nation, so they are choosing not to help the nation transition into an economy that is heavily dependent on fast and affordable communications. To insure that we do not fall behind even third world countries, we must not let the priorities the DSL and cable companies dictate our inaction, nor force taxpayers to subsidize the investments that will generate future profits for them.