Increasingly, Americans are demanding to be jacked into the Internet 24/7—perish the thought of going five minutes without checking your e-mail or surfing naughty Web sites. Several municipalities looking to fill that gap have wrestled with Wi-Fi services, and some have found themselves with more than they bargained for.

A wireless Internet access deal—whether privately subsidized or provided free of charge by a company like Google or Earthlink—might look like an appealing, potentially profit-making venture for a public works department to take on. However, according to a study by the Reason Foundation, such an arrangement could turn out to be a Trojan horse.

“Beware of geeks bearing gifts,” says Jerry Ellig, author of A Dynamic Perspective on Government Broadband Initiatives and senior research fellow at George Mason University. He adds that the fine print of a WiFi contract could grant free, unlimited access to rights of way and various pieces of public infrastructure like light and telephone poles, where Wi-Fi hardware typically is mounted.

The city of Mountain View, Calif., went wireless last year with the help of Google Inc., the Internet search engine company that calls the municipality home. The firm pays $36 a year for each pole—375 poles currently bear transmitters—in a thorough, spelled-out agreement. According to Mountain View economic development manager Ellis Berns, access is just one issue municipalities diving into Wi-Fi need to consider at the outset.

“It's difficult for a community to cost-effectively set up their own citywide Wi-Fi network, due to initial capital outlay costs, ongoing maintenance, and allowing for additional staff time to provide information to users,” Berns says. He adds that citizens were concerned about the appearance of the transmitters and risks of radiation exposure; those fears were allayed by the fact that the transmitters emit less energy than a cell phone, and hardware designs were approved by city staff before installation.

The Reason Foundation report strongly cautions municipalities against Wi-Fi deals, citing competition with private providers, ever-changing technology, and need for continual improvements. While the report provides much food for thought, readers may want to take the findings with a grain of salt. In a similar report, the organization claimed that iProvo, the municipal broadband system in Provo, Utah, was hemorrhaging money, running further and further in the red with no signs of an upturn. iProvo organizers responded with a 31-page document defending the service, responding point by point to the Reason Foundation's claims.

While several cities have opted for municipal Wi-Fi services—San Francisco, Philadelphia, and Tempe, Ariz. among them—the technology is relatively young and not without kinks.

“There are still issues about reliability, and we need to find applications that specifically help public agencies be more efficient with their Wi-Fi,” says Berns. “It will continue to gain in popularity, but like anything else, the technology is constantly changing and improving.”