Honestly, after my last go round with Xfinity customer service I'd switch to the cocainternet in a heartbeat. At least they're up front about their criminal nature and contempt for your life.
It'll be somewhat strange when they get to the point where they're just legitimate businesses price-gouging their customers. It's happening with avocados as well as other monopolies in various places. It's only a matter of time before they're just on the stock market.
That does not work without forcing the users to also use the proxy. Any website that uses https instead of http does not leak passwords, unless the device/browser of the user is compromised.
It sounds like a mechanism to make the town dependend on the cartel for internet, and then demand extortion prices for the internet.