Move over Salisbury, North Carolina. Another city is getting a blistering 10 gigabit fiber Internet service. Say hello to Chattanooga, Tennessee.

Today the Chattanooga Electric Power Board, the city-owned power utility, says that it is now offering 10 gigabit connections—nearly 1,000 faster than the average broadband connection in the US—to every business and residence in the city for about $300 a month. It will also offer three and five gigabit speed connections in addition its existing one gigabit service.

Chattanooga was one of the first cities to bypass large commercial Internet service providers and start offering city-run gigabit-speed fiber services for its citizens back in 2008—about five years before Google Fiber brought comparable speeds to Kansas City.

Commercial providers naturally hate these sorts of government-funded initiatives—known as municipal broadband—and have fought to pass laws to prohibit them in many states. Comcast, for example, unsuccessfully sued the Chattanooga Electric Power Board in 2008 in an attempt to block the network's funding. But the legal tide has been turning, and commercial providers are slowly beginning to actually try to compete. Earlier this year Comcast announced that Chattanooga would be among the first cities in which it would sell its new $300-per-month two-gigabit Internet service.

It's hard to see the new 10 gigabit service as anything more than an attempt to not be outdone by Comcast. Few home users will be able to take advantage of that much bandwidth, but schools and other large organizations could see a real benefit.

At the same time, there's something bigger at work. Municipal broadband providers are raising expectations nationwide for what good Internet service means, forcing commercial providers to improve their infrastructure. And by increasing the amount of bandwidth available, they could be setting the stage for the creation of new, more bandwidth-hungry applications. This is how better service goes from a "nice-to-have" to a "you'd-better-have" for the country's recalcitrant cable companies.