The idea sounds great in theory: Your city partners with a service provider to install Wi-Fi antennas on hundreds of light poles, creating a giant wireless network you can access indoors and out, from any part of town. The provider charges a monthly or hourly fee, but it’s lower than what you’re paying now for DSL or cable Internet access. Plus, the city subsidizes service for low-income residents, thereby helping bridge the digital divide.

Variations include smaller networks that provide free access more as a gesture of goodwill or to promote tourism, like the ones in Central Park and Disneyland. What’s not to love?

Dozens of municipal Wi-Fi projects are currently under way in every corner of the country, including San Francisco, Philadelphia, Austin, Texas and Cambridge, Mass. Projects are underway in London, up and running in Helsinki and planned for parts of Central America. But questions abound: Will it really work as advertised? Will it potentially replace your existing service? Who should pay for it? 

How well municipal Wi-Fi works is an open question. Proponents and critics can describe the same network as a success or failure. Most projects are still in the early stages. Network providers, equipment and layout range from city to city, as do types of building materials and other physical inhibitors to wireless signals.

Business Week took an early look at the performance of one municipal Wi-Fi network in Anaheim, Calif.  Taking the lead is service provider Earthlink, which is building networks to support its Feather service in 13 cities, including Anaheim and New Orleans. Feather will cost $21.95 a month/$3.95 an hour. Earthlink is also negotiating a roaming deal with T-Mobile USA, which provides wireless service to Starbucks, according to Business Week.

The business plans for municipal Wi-Fi projects are also varied and complex. Some are funded by the provider, typically a challenger to an incumbent like Verizon or BellSouth, as a way to attract new customers. Others are paid for by taxpayer dollars, and a few are privately funded. The Gilmore Foundation is funding a municipal Wi-Fi project in Armory, Miss., as part of a broader social program that will also provide laptop computers to every high school senior in the town’s 13-mile radius.

But incumbents, notably Verizon, have fought hard to stop these encroachments. Last year Verizon successfully pushed for passage of a bill in Pennsylvania that gives carriers the right to prevent Pennsylvania cities from creating and charging for municipal networks—a move meant to quash Philadelphia’s ambitious plan. In the end, the city traded its opposition to the bill for an exemption that allows the plan to be grandfathered in, but future municipally funded projects cannot go forward. As a result of the Philadelphia decision, many cities are playing it safe by having the providers pay for and own the network, thereby following a more traditional model.

But at this early stage, what you get depends on where you live. California residents will benefit from Silicon Valley Metro Connect’s plan to provide free wireless broadband throughout 42 cities. The group, which includes Cisco Systems, IBM and provider Azulstar and nonprofit SeaKay, will blanket 1,500 California miles with a mix of Wi-Fi and the more powerful Wi-Max network technology. Mountainview, Calif. will soon benefit from a network built by business resident Google. 

Not all municipal Wi-Fi projects are geared toward broadband access. Cambridge, Mass. is partnering with Harvard University and provider BBN to build a network attached to various types of sensors, such as those that monitor weather and pollution. The Harvard School of Public Health wants to use the system to track levels of airborne particles that cause health problems. But in all likelihood, city residents will be able to ride the network free of charge.

In New Orleans, it’s another story. In response to Hurricane Katrina leaving the city’s police department without a headquarters, BellSouth set up a Wi-Fi network so disparate police officers could communicate, and promised to provide a 250,000-square-foot building to house the department. But when Mayor Ray Nagin touted free Wi-Fi access publicly as a way to attract new residents and businesses, BellSouth reneged on the building.

But what if you don’t have Google or Harvard paying for your Wi-Fi?  According to a new study by Jupiter Research, municipal Wi-Fi could cost as much as $150,000 per square mile over five years, when you count the cost of building and maintaining it. The report says that about half the municipalities creating wireless networks won’t break even, even if they charge residents $25 per month.

Worse, some argue building public wireless infrastructures poses a security risk. Critic Winn Schwartau, a technology security expert, points to the massive Wi-Fi network being built in a suburb of Vancouver, British Columbia, the site of the 2010 Winter Olympics. Schwartau cites the risk of terrorists compromising information through public Wi-Fi networks.

Only time will tell how municipal Wi-Fi plays out, but if you’re determined to some day give up your pricey broadband service for a public wireless net, be prepared to watch ads in exchange for access. The U.S. startup Freehotspot.com is currently rolling out free ad-supported public hotspots in bars, hotels and restaurants in Dublin, Ireland. The same business model will likely catch on in the U.S.

About the Author:
Toni Kistner - Contributing Writer

Toni Kistner is a technology writer living in Cambridge, Mass. Her main focus is networking and wireless technology.