WIFI - Public utility or private commodity

I was talking to one of the students here at the university about blogging as a community media. He had written a posting to his (always interesting) blog about (a)synchronicity . He had noted that as the competition stiffened between broadband providers, the delivery pipes were getting fatter, but only in one direction.
Companies are interested in delivering telephony, cable TV, entertainment etc. but not in distributing information. As he pointed out, the downstream (delivery) rate of an ADSL-line (by far the most common way for consumers to get broadband) can be as high as 28 Mbps while the upstream (distributary) can be as low as 0,8 Mbps.
So what? Well, it means that the much touted journalistic prosumer aspect of the web decreases and the pacification aspect increases. If you are the owner of a broadband delivery company and also the owner of the content that is being delivered, will you help people compete with you? Give them the chance to broadcast their home-made chat shows? Allow community media using broadband-publishing to discuss local issues that might cut into your newspaper sales, or you TV-stations ad revenue?
The proponents of liberalism (in the Swedish context) and capitalism say that the free and fierce competition of the de-regulated marketplace gives the best possible service. Which leads me on to the headline of this post.
I was reading about a bill just passed by Pennsylvania's House and Senate in which there is a provision to kill "Philadelphia Wireless" -- an ambitious plan to build a Wi-Fi network to serve the city's working-class communities - on the grounds that as the state would be subsidizing access it would skew competition and pose a threat to the major player Verizon Communications (whose lobbyists were active in drawing up the wording of the clause). If Verizon win this one it will be seen as a precedent and other projects to bring broadband connectivity to parts of the populace who cant afford the rates charged by (often monopoly) companies will be atacked.
This is the logic used by de-regulators in the EU. All state subventions are intrinsically bad as they skew competition. Hospitals, transport systems, schools, media - all need to be privatized. It gives consumers a choice is a recurring mantra. But time and again we see the same pattern. If you can not afford the service then do without. Need an ambulance? Show me the money! Starving? Forget food-stamp programs - find a charity! [more on faith-based dismantling of the residual welfare state]

But there are compelling reasons to see Wi-fi access as a public utility. In Wired 12.11 we can read of the 311 service in New York. I wont go into detail, you can read the article. However one of the possibilities in a (free) Wi-Fi covered city is the possibility to:

Connect 311's database to a city full of Treos or Wi-Fi laptops, and it's easy to imagine the extended urban organism growing more adaptive: subway riders tapping in up-to-the-minute reports on passenger loads and parents giving high marks to a new hire at a school.

There would be huge gains to cities, in better governance, early warnings systems, democratic participation, adhoc discussions locally, crime prevention and more.
It would cut into private companies profits (I can hear them howl, growl and cry foul as I write) but would increase the quality of life, the good governance and the value of the tax kroner for the majority of the citizenry.