Writing for the Foundation, Jerry Ellig warns that government involvement in wi-fi is problematic, even when the service is "free."

"Proposals for free or privately subsidized Wi-Fi are obviously attractive at face value. Exclusive access to rights-of-way and poles would bestow a significant competitive advantage on any firm selected to use them.

Local governments should beware of granting one Wi-Fi provider exclusive access to public assets, even if the Wi-Fi service itself is free of charge to users. Local governments should not let the sizzle of free Wi-Fi obscure the consumer’s stake in competition."

Among the problems: government service is prone to being locked into obsolete technology, taxpayers will become financially vulnerable, and public entities will be hard pressed to pour in the required investments. Further, 93 percent of all ZIP codes had at least 2 competitors for broadband, undermining the argument that it is necessary. Ellig's report is (PDF) A Dynamic Perspective on Government Broadband Initiatives. (A summary, also PDF, is available.)

Reason also has case study, called Spinning the Wheels (PDF) of Provo's experience.