Madison Wisconsin has installed "phase 1" of a city-wide WiFi "mesh" network, and fornutately my home is inside it ;-).
This "mesh" allows free access to local government, university and cooperating companies. Initially it will also allow free access to all internet sites, but after the introductory period users will have to pay local ISP firms for access to the full internet. The Wisconsin legislature passed a bill making it difficult for cities to offer "community internet" to their residents (article). By limiting the free WiFi access to those sited inside the "walled city" (i.e. served by the "mesh") the city was able to get the cooperation of the ISP companies, who will still be providing the (paid) access to the internet outside the "mesh".
The "walled garden" (thedailypage.com article) is still being defined and it will be interesting to see what it develops into.
This service is provided via an organization called MadCityBroadband and is designed to there is NO cost to city government in either establishing or operating the network. MG&E, the local utility is providing access to its poles for mounting WiFi nodes and other companies are supporting other aspects of the free access. Subscriptions through ISPs will support operation.
MG&E's interest comes from the possibility of performing "meter reading" remotely via the WiFi "mesh" which would reduce their labor costs significantly for this monthly operation.