But the switch to fiber IS worth it by an objective measure. A better, more reliable, higher bandwidth phone system IS worth it. The problem, from a phone company perspective, is that revenue is basically inflexible. The phone company is going to make the same amount of money on that region regardless of the quality of service they provide.
Sure look at the railroad business, and remember how and why it exists. We as a country realized we needed a national rail system and paid an arm and a leg to get it. And it was great all the way up until we stopped thinking it was important (ie alternatives came to be) and now the system sucks. Had we waited until alternatives were in place to stop feeding the phone system that would be fine. But we didn’t. And frankly it’s still not there, as much as we like to tout the internet as the all creature an amazing amount of the internet is going over that phone company backbone. Backbone that is not corporately profitable to improve, but that is desperately in need of improvement.
This statement doesn't make any sense logically. If a phone system is better, more reliable, and more robust, then customers ought to be willing to pay more for it. The fact that they aren't willing to pay more tells me that they don't agree that it is better. It's probably comparable to Ford putting an options package from a Lincoln Navigator in a Ford Focus. They aren't going to sell that tricked-out Focus for any more than their base model, because the typical buyer of a Focus isn't looking to buy all that anyway.
Go back and look at the history of the U.S. railroad industry again. It wasn't originally developed as a "national rail system" at all. That came later, and was really one of the untold reasons behind the Civil War (the Federal government had to usurp state regulatory authority in order for a railroad system to be constructed across the entire continent; it's no coincidence that Abraham Lincoln started his career as a railroad lawyer). And even then it was never really a "public utility" as we would understand that term today. It was privately owned and operated, for the most part.
It's also hardly the case that "the system sucks." The (privately owned) freight railroad system in the U.S. is the envy of the world, and has seen tremendous improvements in profitability and efficiency over the last 30-40 years. This was driven largely by a deregulation process that unfolded around the same time AT&T was being broken up.
It's the passenger rail system -- run mostly by government agencies under a "public utility" model similar to what you're recommending for telecommunications -- that truly DOES suck.