Most of those conditions seem reasonable to me except for the ban on cross-subsidies and sub-cost pricing. If a municipality chooses to pay for a subsidized city broadband network from tax dollars, I don't see why they shouldn't be able to. At least, I don't see a reason that that decision has to be made for every city by the state legislature, instead of leaving it to each local government to decide its own policy on the subject.
More important on the cross-subsidy issue, I doubt the commercial ISPs will be banned from subsidizing the connection service with their business as a content provider. If the existing ISPs were just ISPs, then the ban on cross-subsidies would actually level the playing field, but that's not the case.
