I don't believe the definition includes any such restriction. It give priority to authorities covering several communities, such as the MTA. However, in a small town which may have two buses, the city owns the bus service company. Even here in Ottawa, OC Transpo is owned by the City of Ottawa. The municipality may acquire the entity, but in large metropolitan communities, it's a little different, because many municipalities are involved in providing the service. In that case, it is difficult for one of the municipalities to acquire a portion of the corridor. However, that in no way restricts the options for small authorities.
On December 7th, 2006. See this statement in context.