AP notes that there's no great success story in early city-wide Wi-Fi: I don't think the long-term prognosis is failure, except in cases where cities and providers don't adjust to the reality of how it's playing out. The low subscriber numbers should not be a problem if the contracts with cities or the cities' own arrangements were designed to have many different lines of revenue that would mature separately. As it stands, the focus has been on residential use, and that's changing.
Back in Feb. 2006, I listed the many kinds of wireless networks that would be built for a so-called "Wi-Fi" deployment citywide--and thus lines of revenue--that service providers should engage in to have the chance at success, along with a list of potential services deriving from that. Service providers should be offering, and cities requiring, public safety networks, public access, municipal worker access, mobility applications and device support, and residential and business service.
(Esme Vos notes a significant error in the story that I missed: the reporter says most muni-Fi networks are paid for by the cities: "Most communities, including Lompoc, paid for their projects. Elsewhere, private companies agreed to absorb costs for the chance to sell services or ads." The vast majority of city-wide networks are built on the provider's dime. However, there is still the concern that networks, once built, could become a city liability if the city and its residents depend upon it and the provider wants to shut it down or goes bankrupt. Update: AP ran a correction.)
Houston tech reporter says city should own its own Wi-Fi: In the wake of the above and other articles about metro-scale Wi-Fi networks failing to earn out early, Dwight Silverman repeats his contention that Houston's 600 sq. mi. network should be built out by the city rather than a private firm. "Ubiquitous, reliable and robust connectivity to the Internet is to the 21st century what a network of paved roads was to the 20th, and should be enacted for the public good." He suggests if that's not possible that the incumbent wired providers pay EarthLink so that cable and DSL customers also have free access to the citywide network. (That ain't going to happen: EarthLink will charge $8 to $12 per month on a wholesale basis, and I suspect Time Warner/Comcast and AT&T would rather not give away that sliver of their margin.)