I'm against it
As much as I appreciate the free hotspots as I travel, I'm against government getting involved with providing such hotspots. I think this is a matter that is entirely capable for the private sector's hands.

I say this as a strong advocate for cable access and other sorts of community funded communication. The problem is that wifi is indeed different, and doesn't need "universal right of way" like cable access or telecom. It just needs some good select spots, which private enterprise (such as Ricochet) have managed to figure out.

Keep the government out of things that the government doesn't need to do, I say. Let the free market reign.

I'm for it
This is exactly the sort of project government should be involved in.
Earlier in the twentieth century, we saw that government regulation was required to bring telephone service to less-affluent and difficult-to-serve areas.
Actual government intervention was required to bring electric power to the those same people. Every time I pass a TVA facility, I smile.
Without government intervention, my uncle in the Ozarks (five kids, a wife in a wheelchair, and slightly disabled himself from World War II) would have waited until the nineties for power and telephone service. (Maybe the eighties, but I pick the nineties because that's when he finally got running water--a utility in which governmental activity was less pervasive.)
When I travel through Atlanta or the Bay Area, I can tell what part of town--rich or poor--I'm in by what sort of connection I've got on my Sidekick and what sorts of Wi-Fi I can see on my iBook.
The telecom companies are very explicit about their willingness to move heaven and earth to provide top-quality service to their high-value customers. That's what the free market does--one of the things, at least. The other thing it does is move hell on top of the lesser-value customers. After all, if you move heaven and earth, you have to make some room elsewhere.
The government usually exercises its authority in favor of those with money, power, and influence. Time to see that authority put toward the public good again.

I'm against it
While private industry is entirely capable of doing it, I think we as a nation would benefit greatly if it were done by the government and funded through taxes. Why? Compare it to the ultimate economic benefit of the interstate highway system.

Initially envisioned as a defense plan, to facilitate the movement of military goods and personnel from coast to coast, interstate commerce on the highway system is probably the single greatest economic incentive american industry has ever had. And, as US citizens, we take it as a given that we can move easily from state to state using these same government produced pathways without incidental tolls/fees. When the internet was labeled as the 'information superhighway', that wasn't just a reference to the speed of data - it was a direct reference to the economic and cultural benefits we would see when provided with unhindered and immediate access to transmission of data without being nickled and dimed by middle men. I can't think of a single more potent catalyst for social, economic and political progress than inexpensive, unhindered (and uncensored) personal access to the internet for all residents on a national scale. Why do you think the Chinese government is fighting it?

This really is the first opportunity to give voice to the poor and disenfranchised, and would be a helluva lot more useful to those that can't afford to pay for internet access now than to spend the same money hard-wiring specific public building (schools and libraries), where they're not as likely to take advantage of it due to social pressures or limited transportation.

As far as the lost revenue to phone companies? If you want a private pipe, go for it. If you want faster access than the public hotspot, go for it. If you want better reception at your house, fine. I'd rather give money to companies that produce content and real products than to those that charge me money to see my own email.

I'm against it
It's not fair to compare this to the Interstate Highway System, because the Interstate Highway System requires public right-of-way, and you can't have separate private corps "competing" for this. It's the same reason we have the FCC, and the city/county/region organizations that regulate right-of-way issues such as cable: because it's not effective to compete there.

However, it is effective to compete for 802.11 service. Therefore, we can have private companies try to set up their service, and the consumer decides. This is far better than having One Government decide that port 25 should be blocked (what, no relay?) and AIM is a bad protocol ("it's only for hackers and freaks"). No, I really really want private enterprise in this space, to keep the government honest.

I'm for it
You'll think this, until the day they deny $your_favorite_p2p_protocol (such as AIM), because they think it is "only for hackers".

And at that point, you realize you are all drinking from the only well in town, but it's the polluted well, so you're all getting sick.

Thus, you must compete in this arena... it's the only strategy that can possibly lead to the cheapest cost for the most (aggregate) people.

That could happen, but...
merlyn says (and I agree) it might be that a municipal wireless network might "deny $your_favorite_p2p_protocol (such as AIM), because they think it is only for hackers'."

It could also be that privately-owned networks could be required by law to do the same thing.

I don't think municipal wireless will necessarily pre-empt private wireless. Many businesses (and not a few individuals) want some higher class of service than the municipal networks require.

Municipal wireless is going to be mass transit.

There'll always be a market for taxis.

merlyn may be right that competition is "the only strategy that can possibly lead to the cheapest cost for the most (aggregate) people," but I don't know that's the right standard. It could be that a higher aggregate cost would also provide a more democratic distribution of costs. It's worth some inefficiency in providing public services to provide them in a way that serves the public good.

(This is where I usually segue into my tirade about the silliness of the idea that government should be run like a business, but I'll spare you.)

How much ineffiency should be tolerated? I'm going make up a number: Fifty percent of what you think is necessary to acheive your other goals. That gives you a fair shot at hitting the real number.

That could happen, but...
I don't want government to be run like a business. I want government to stay out of things that private enterprise can do.

And, much to my surprise, a relevant slashdot thread illustrates my point.

Texas state runs the wifi at truckstops, and pressure from the right forces them now to filter those sites. Gah. So, you end up serving no one adequately.

The service is "just good enough" and is cheap enough (subsidized by tax dollars and therefore non-users) that the next tier of market service isn't possible because the economics don't make sense. But if the gov hadn't been in there in the first place, a private provider might have been able to defend against the radical right to maintain an open pipeline of their choosing.

No more hotspots!
Hotspots are going to be the commercial model for the near term. Until we get pervasive grids in the long term (maybe not all that long--I'm hopeful), to get wireless connectivity outside the hotspots (profitable) and into underserved areas (not) will take somthing other than the free market. Some of that can and will be done by non-profits, but there's also an important role for government.