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This model is called open access fiber in the US and is how fiber is currently being rapidly built in small and medium cities, and some rural areas. It’s a significant change from a few years ago. Usually the fiber operator signs a telco as an “anchor tenant” for the city for mutual financial stability and then one or more other ISPs compete. Typical offerings are between 300/300 and 8 gigs(!) with 1 and 2 gig priced reasonably.

Physically, they’re negotiating the dig with the appropriate government body and then doing it all at once. Cables are buried by roads. The ISPs connect the network to the individual homes when the home signs up. Large apartments and office buildings have the dig done in advance and are usually restricted to one ISP tenant that the network operator chooses to service those locations/accounts.

Both the fiber operators and the ISPs are raising money to expand faster, in addition to the public money available, because the capital risk of this model is low, as you said.