WASHINGTON — The conventional wisdom that small towns are the boonies in today's communications boom is turned on its head in places like Glasgow, Ky., where nearly half of the 6,000 residents have high-speed Internet service at rates city slickers would envy.

        In Glasgow, the local electric utility is offering speedy Web hookups for as little as $24 a month, plus 50-channel TV viewing for a mere $13.50.

        In hundreds of small communities, Lebanon in Warren County among them, communications services are coming from the local water, power or gas utility — outfits as familiar to citizens as the hardware store on Main Street.

        Over the years, these utilities have discovered their networks of wires, plumbing or gas lines are handy, too, for offering cable television or phone service. Now they are getting in on the Internet as well.

        While no federal law prohibits public utilities from providing this service, the telecommunications industry is hollering foul.

        “We feel that we shouldn't be competing against the entity that regulates us,” said Steve Kipp of AT&T Broadband, which has challenged public utilities in a number of places.

        Private companies say it is not fair for utilities to use tax dollars to operate an Internet service at a loss — as many do — or at a break-even cost that the industry could never hope to match.

        The government, for example, can lay telecommunications equipment for free on its own land but could charge private companies millions to do the same, says Bill Bates of the United States Telecom Association, a phone lobbying group.

        Municipal officials say if they did not bring Internet service to rural America, no one would, or at least not affordably.

        “Iowa is just not a big market,” says Patti Cale, energy services coordinator at the Iowa Association of Municipal Utilities. “If we are going to have state of the art service, it seems in some cases municipalities are going to have to be the provider.”

        Private companies are not rushing in to places like Paragould, Ark., population 23,000, where the power company plans to supplement its cable and regular Internet services this fall with high-speed Web access for $35 a month.

        “Why should our communities do without until they decide they want to enlighten us?” asked Larry Watson, chief executive officer of City Light, Water and Cable in Paragould.

        People “are not going to wait 20 years for the Internet or other services we can provide.”

        At least 357 public power systems offer communications services, according to the American Public Power Association.

        Officials contend fast connections for a small community are a necessity to attract business. In places where private companies already compete, utilities say their presence drives down costs.

        In nearly a dozen states, companies and industry groups have lobbied for laws that limit what public utilities can offer.

        Arkansas utilities cannot sell dial-tone phone service to residents. Utilities in Texas are prohibited from offering telecommunications services. Florida law levies special taxes on telecommunications offerings from public entities, which opponents say ultimately raises consumer bills.

        At the same time, the telecom association says it wants broader federal legislation to ensure that government and private entities must abide by the same rules.

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