This is how it worked in the early days of the internet, when DARPA and universities developed the internet protocols, and used commercially available hardware to run their software.
Except that government is really just another company, much bigger and often less accountable, plus it can make its own rules.
There is nothing fundamentally different between a government and a powerful company. They both suffer from the same problems, and succumb to the same evils. If this weren't the case, then we wouldn't need unions for government workers. Governments also don't have competition driving them to increase efficiency or improve their service to "customers".
If the government were in charge, the Internet would probably still look BBS's from the early 80s.
There is definitely a role for government to help create and agree on International standards, and to create regulations to protect people, but pretending that handing this stuff over to them would not be a total train wreck in one way or another is naive, in my opinion.
Did you read my second paragraph/line? The government built the internet as it exists now (minus the corporate junk).
