The Wall Street Journal writes about the Pennsylvania legislation to ban municipal networks: The Journal's Jesse Drucker does his usual comprehensive job in describing the scope of the law awaiting the governor's signature in Pennsylvania that would disallow municipalities from building their own networks offered on a fee basis to residents unless they were in place by January 1, 2006.
If you want the summary of why cities and towns are building broadband wireless networks, you have this superb quote. "There are some very specific goals that the city has that are not met by the private sector: affordable, universal access and the digital divide," says Dianah Neff, the city's chief information officer. She says that less than 60% of the city's neighborhoods have broadband access.
The telcos don't want to compete against the government, and I can see how there's a disincentive to build service in a market in which the local municipal authority will be offering the lowest possible rate for the broadest audience. It makes more sense for municipalities to cooperate with telecommunications firms, nonprofits, and other institutions to provide an infrastructure--the wires, towers, radios, and so forth--and not the actual service.
Update: Some good additional detail appears in an IDG News Service article that notes there's ambiguity about the interpretation of the grandfather clause. A staffer of a Republican backer of the bill says having a single subscriber qualifies as an operational service, while Philadelphia is concerned the language isn't clear enough and may accelerate plans.