WITH visions of pots of gold dancing in their heads, city councils often get the idea that they can put together a business activity which some private vendor has been unable to do. The temptation is often overwhelming. Take the current example here in Milpitas.

EarthLink, one of the nation's top Internet service providers, found it had lost about $100 million in setting up and running wireless services in cities across the country. One of these was Milpitas, which gained about a $1.5-million investment in facilities on our power poles, which enabled much of the community to get fast Web service at home or while sitting in a coffee shop. Seemed like a real winner.

Fast forward a year or so and EarthLink has hit some rough spots and a less than overwhelming consumer response and has decided to bail. Milpitas now has a chance to take over the operation or at least inherit the equipment and the idea.

Part of what EarthLink did for the city as part of the negotiation to get use of our streets and poles was to provide a service so that special Global Positioning System gear in about 50 police and fire vehicles could receive satellite direction and tracking in emergencies.

The city's information services director, Bill Marion, says that part of the Wi-Fi is useful and economically justified to continue. The remainder of the service can be put on the back burner until another operator comes along. The reduced service could be kept going by the city for

It is understandable that there is interest on the part of the city council in seeing whether there really might be a pot of gold hiding there somewhere.

The cautionary note we would offer is that experience seems to show governmental agencies are likely to fail in running businesses that entrepreneurs could not make work. A few examples come to mind.

One of the founders of the highly successful Nob Hill Foods markets went into a theme park venture in Gilroy. The losses were unceasing. So now the City of Gilroy is taking on the theme park.

The City of San Jose has had several fiascos concerning quasi-business ventures ranging from vacant commercial space in its new city hall, to the booking of events and conventions in its various group venues.

The county supervisors' endless flailing with a continually money-losing county fair is now legendary.

Caution lights ought to be burning brightly at Milpitas City Hall when talk arises about what might be done to rescue the Wi-Fi service.