This does seem suspicious to me, it's a descendant of the argument that Comcast used in it's failed lawsuit against EPB.
Everyone in America has relatively terrible Internet access; our country needs better, and whichever cities jump on it first stand to gain a huge technology windfall. EPB's fiber to the home means a shot at really good network connectivity here, and with the low cost of living, the next Google could come from Chattanooga.
If this suit is a tactic of Comcast or AT&T, the city needs to find out, and understand the implications. A good quality Internet provider means new industry, and industry with huge potential gains for the city.