I'm not sure this is quite true. I know the 2005 SCOTUS ruling overturned the prerequisite for ILECs to lease their equipment/loop to CLECs, but I didn't know that cable companies were barred in any significant way from offering their own telecom/data services in municipalities. Link? Perhaps you're talking about capable companies that originally tried to get into telecom (i.e. phone service) but couldn't adhere to the regs for providing emergency services and in particular providing power to their phone lines at a CO the way AT&T does with their leased lines but which still today cannot be provided by cable companies if their VoIP cable phone lines experience an area-wide power outage. I imagine it depends how you define a "cable company" given that what they offer nowadays is very different from 20 years ago.
Anyway, I support classifying ISP's as telecoms purely from the perspective of ensuring net neutrality is adhered to, which I think is different from what you're claiming about cable companies being barred from offering service in municipalities. If classifying ISP's as telecoms under FCC rules means monopolizing areas with gov't backing, I wouldn't support that barring some very good reason (like emergency 911 services or cable companies not being able to provide power from a CO the way AT&T can).
In any case, on your ILEC/CLEC point, my real world experience is this; if I were to, say, decide to switch from AT&T phone lines to VoIP, and choose a company like Windstream who (while not a cable operator) can indeed lease those copper lines from AT&T and provide voice and Internet data over them (for a fee), that has to be perfectly legal (I've done it). But what price Windstream pays to AT&T, I don't know, though it appears the 2005 SCOTUS decision (to not appeal the lower court's ruling) to not force ILEC's to lease equipment/loops to CLEC's means AT&T didn't have to lease to Windstream in my scenario.
Overall, I'm not sure if municipalizing the copper/fiber is the way to go, but if it brings more competition I'm all for it. But I'd also like to make sure net neutrality isn't lost in the debate, as content providers like Netflix shouldn't need to subsidize ISP's network buildouts, which is essentially what they're doing, given that the model of mutual cooperation amongst ISP's (i.e. peering) has worked so well. You run into the issue of content providers, who are also ISP's (TWC, Comcast, etc.), having perverse incentives to slow down traffic or at the very least open the door to it. That's not the way the Internet was born and subsequently exploded; it was wide open and it worked well and continues to.
Granted, I have heard some opinions that the incentive to build out their networks is increased if ISP's are able to monetize more of that "peering", I just don't know if the benefits of that (faster speeds for some) outweigh the costs (slower speed for most). That's very tough to know without more data and studies.