As San Francisco's Board of Supervisors mulls a proposal for a citywide wireless network, it faces a question being asked by cities nationwide: Is municipal Wi-Fi an overhyped technology in search of a problem?

Dozens of U.S. cities, including Alexandria, Va., Houston, Philadelphia, and Portland, Ore., have built Wi-Fi networks, and many others are evaluating them. The lure is that Wi-Fi is a relatively easy way to bring broadband Internet access at little or no cost to the municipality, funded in-stead by subscription fees and advertising.

	(click image for larger view) Up on the roof: WiFi antennaes atop the roof of Anaheim's city hall. Photo by Gilles Mingasson/Getty Images view the image gallery

Many of these projects, however, were begun in haste as radio frequency fever gripped mayors' offices and city councils across America. As a result, they're based on dubious "build it and they will come" economic models.

Many of the most ambitious projects have yet to go live, while several that are up and running have reported trouble signing up subscribers (see story,"Municipal Wi-Fi Pioneer Asks, 'Where Is Everybody?'"). When customers do sign up, spotty network coverage is an issue. Tempe, Ariz., for example, had to double the number of access points originally deployed per square mile in order to get adequate coverage. The rule of thumb used to be that 15 to 20 Wi-Fi nodes would cover a square mile; now it's twice that many.

The uncertainties are manifest in a variety of ways. EarthLink, one of the biggest network players, last month revealed that it would consider new muni Wi-Fi projects "on an individual basis." After reporting a $30 million loss in its most recent quarter, EarthLink is putting the brakes on a technology with no clear return on investment.

"We're at a point in the industry where everyone is pausing and taking a step back to see how this is going to actually work in practice," says Cole Reinwand, VP of product strategy and marketing for EarthLink's municipal networks division, while giving me a tour of downtown Anaheim, Calif., where an EarthLink Wi-Fi system is under construction. "The whole market is in this wait-and-see mode, to see if this thing can be proven."

One of the most affluent communities in Orange County, Anaheim has a population of 329,000 with an average household income of $57,000, 14% above the national norm. The city's mayor, Curt Pringle, sees nothing but upside in the $5 million construction of a Wi-Fi network, since local taxpayers won't have to bear any of the cost. "We don't want to own it, we don't want to manage it, and we don't want to set prices," Pringle says. In fact, the city stands to make money by charging "a small rent" for access to the streetlights on which the wireless gear is mounted.

Pringle had one requirement when negotiating with EarthLink--the network had to extend across the entire city. "We've brought about a change in government mentality by establishing a market-based framework surrounding all our major decisions," he enthuses. "And we've applied that in the case of bringing about a new way of instituting a municipal Wi-Fi network."

That new way is to let the market determine whether Anaheim's network will thrive or fail. From the roof of City Hall, you can see Anaheim's new wireless system, based on Tropos Networks access points (including RF antennas) and Motorola Canopy gateways, which backhaul the signal to fiber-connected points. Currently covering several square miles of downtown Anaheim, the network will be 80% completed by early summer, Reinwand says. Anaheim eventually will be blanketed with Wi-Fi, providing residents, visitors, and local businesses with Internet connectivity outdoors and, via signal-boosting wireless modems, indoors as well.