NEW ORLEANS — To help boost its stalled economy, hurricane-ravaged New Orleans is offering the nation's first free wireless Internet network owned and run by a major city.

Mayor Ray Nagin said yesterday the system would benefit residents and small businesses who still can't get their Internet service restored over the city's washed out telephone network, while showing the nation "that we are building New Orleans back."

The system started operation yesterday in the central business district and French Quarter. It's to be available throughout the city in about a year. The bulk of the equipment for the system was donated by three California companies.

Hundreds of similar projects in other cities have met with stiff opposition from phone and cable TV companies, which have poured money into legislative bills aimed at blocking competition from government agencies — including a state law in Louisiana that needed to be sidestepped for the New Orleans project.

The city had been working on a Wi-Fi network before Hurricane Katrina struck Aug. 29, and police already were using the wireless system to monitor street security cameras.

Nagin said Katrina, which knocked out communications throughout the region, frustrating coordination of relief efforts, showed the need for a more-advanced system.

In case of another storm, the network will be able to connect telephone calls via the Internet.

"What we learned is a network like this is important as a backup in case all other communications fail," the mayor said.

The system uses hardware mounted on street lights. Most of the $1 million in equipment was donated by: Santa Clara, Calif.-based Intel Corp., Sunnyvale, Calif.-based Tropos Networks Inc. and Pleasanton, Calif.-based Pronto Networks. The companies also plan to donate equipment for the citywide expansion. Tropos is connecting the system to the Internet at no charge.

The network uses "mesh" technology to pass the wireless signal from pole to pole rather than each Wi-Fi transmitter being plugged directly into a physical network cable. That way, laptop users will be able to connect even in areas where the wireline phone network will take time to restore.

The system will provide download speeds of 512 kilobits per second as long as the city remains under a state of emergency. But the bandwidth will be slowed to 128 kbps in accordance with a limit set by Louisiana's law once the city's state of emergency is lifted.

The service will remain free for residents and businesses after the state of emergency ends.

Phone and cable TV companies have fiercely opposed attempts at creating new taxpayer-owned utilities. The companies contend competition from government-run Internet service stymies their incentive to invest in upgrading their networks and services.

Critics have said commercial networks are often too expensive for the lower-income residents being targeted by the free or low-cost services now being considered by hundreds of municipalities around the country.

But David Grabert, a spokesman for Cox Communications, a major cable TV and high-speed Internet provider in the New Orleans area, said the Atlanta-based company welcomes the competition.

"This is a relatively slow-speed service, and we don't look at it, at this point, as major competition for our high-speed service," Grabert said. "We're ready to compete with all comers."

Many cities have partnered with private companies to build and operate their networks. Philadelphia, for example, is developing a citywide system that will be run by Earthlink Inc., unlike the New Orleans owned-and-operated system.

Nagin, who was Cox's top executive in New Orleans before his election in 2002, said the city system would be "just one of several options" residents would have to get Internet service.

At 512 kbps, the New Orleans network is about seven times the speed of dial-up service, but slower than high-speed services provided by telephone and cable TV companies. Users will have to sign up with the city for an account.

Greg Meffert, the city's technology director, conceded that private providers might have problems with the system.

"In the end, my job is to work for the city and what the city needs," he said. "I'll stand behind that."