> Tax their profits and transfer it to the people. It's simpler, more visible, less unintended consequences
How is that simpler? I'm assuming by "transfer it to the people" you're talking about a subsidy paid out where the customer pays $15 and the municipality then pays the balance, but why should they? The data networks the ISP is paywalling access to were in large part already funded by the taxpayer. And besides-which, that doesn't put a cap on the price the ISP can charge at all, and in fact gives them a reliable avenue to now help themselves to either the pocket books of the people it's meant to be benefitting, or the state coffers, neither of which is a good solution.
And as to the market effects, I mean genuinely, have you ever purchased internet service? Because I have since I moved out of my parents house in the mid 10's, and I assure you as a sysadmin and pretty techy person, in that time, I needed ONE (1) service call to address an issue in their wiring, and apart from that, to my knowledge, I was basically 100% profit, minus whatever expenses go into maintaining the trunk, and my price went from about $70 per month to within shouting distance of $200 over the course of 3 years, and then stayed there for the subsequent four years, for pretty middle of the road service at half a gig down and about 35 MB up. So I guess by your logic, there must've been a hell of a lot going up further up the trunk to justify me paying ballpark $7,000 over those months.
Or, more likely, the CEO wanted another yacht.
Edit: This stuck in my craw so I googled a bit, and the biggest provider of fiber service in New York is Verizon FIOS, who posted a profit last year of EIGHTY. BILLION. DOLLARS. So you'll forgive me if I have doubts that even if we presume they're losing their shirts on this $15 per month program for qualifying low income folks on a per-address basis, that they're going to go under about it. I think they'll manage just fine.