The digital gold rush is on across America, as cities scramble to develop free or low-cost Wi-Fi zones. These public on-ramps to the Internet are designed to provide every citizen with a form of always-on, high-speed Internet access–at the playground, in the office or at home–at low or no cost.

Dozens of communities large and small, in red states and blue, are either planning or currently constructing Wi-Fi systems. Community leaders–from Philadelphia; Houston; Columbia, South Carolina; and San Francisco, to name a few–recognize that creating a citywide Wi-Fi zone is not only vital for economic development and public safety but helps insure that Americans who can’t now afford digital communications on their own can also tap in to the riches and convenience of the Internet. But there is no such thing as a free digital lunch.

Consumers and public officials should have no illusions that what is being touted as a public benefit is also designed to spur the growth of a mobile marketing ecosystem, an emerging field of electronic commerce that is expected to generate huge revenues for Google, Microsoft, AT&T and many others. Soon, wherever we wander, a ubiquitous online environment will follow us with ads and information dovetailed to our interests and our geographic location.

Unless municipal leaders object, citizens and visitors will be subjected to intensive data-mining of their web searches, e-mail messages and other online activities are tracked, profiled and targeted. The inevitable consequences are an erosion of online privacy, potential new threats of surveillance by law enforcement agencies and private parties, and the growing commercialization of culture. Mining Your Data

Consider the application submitted to the City of San Francisco in February by search giant Google and its partner, the Internet service provider Earthlink. One of six Wi-Fi bids being considered by the City of San Francisco, the Google/Earthlink plan has attracted the most attention. Under this proposal, Google would provide a free but relatively low-speed Internet service available throughout the city (Earthlink would operate a higher-speed service on the same system charging users $20 a month). The costs of operating the “free” service would be offset by Google’s plans to use the network to promote its interactive advertising services.

Everyone who uses the Google network would first be directed to a portal page, where they would be offered an array of what Google terms “personalized consumer products.” Through those products and other technologies, Google plans, according to its proposal, to “target advertisements to specific geographical locations and to user interests.”

What this means is that Google and Earthlink plan to use online files (known as cookies) and other data-collection techniques to profile users and deliver precise, personalized advertising as they surf the Internet. (Earthlink is working with the interactive ad company DoubleClick, which collects and analyzes enormous amounts of information online to engage in individual interactive ad targeting.)

Not everyone is enthused by the Google/Earthlink model. San Francisco was advised by a trio of privacy advocates to develop policies that would respect personal privacy. In letters to the city, the ACLU of Northern California, the Electronic Frontier Foundation and the Electronic Privacy Information Center (EPIC) urged the adoption of a “gold standard” for data privacy, insuring that its Wi-Fi system would “accommodate the individual’s right to communicate anonymously and pseudonymously.” The groups also suggested that the city require any Wi-Fi company to allow users to “opt in” to any data-collection scheme. [Full disclosure: I rent office space in Washington, DC, from EPIC]. Scary Syllables

These two syllables–“opt in”–strike terror in the hearts of Google, Microsoft, AOL and everyone else in the interactive marketing field. Opting in requires users to affirmatively give permission before any data can be collected. Individuals would be fully informed about how such information would be used (such as profiling, sharing with others, etc.). What companies want instead is an “opt-out” approach, in which the default is always set to collect and make full use of our personal information.

As EPIC’s West Coast senior counsel Chris Hoofnagle explained, “The Google plan proposes to bargain away users’ privacy for a trickle of Internet connectivity.” Google will have an unprecedented ability to monitor use and build records of web activity. These records will be a honey pot for law enforcement. Individuals’ privacy is worth more than a 300K download speed.” (Other Wi-Fi applicants in San Francisco also favor opt-out data-collection technology. One applicant, the NextWLAN Corporation, envisions “an e-commerce monetized, fully captive, location-aware Internet portal.” But also on the table is a proposal from the nonprofit Seakay that offers a free service and pledges no personal information will be collected online.

The interest San Francisco and other cities have in securing the financial support of commercial investors for their Wi-Fi grids in part reflects the success of the campaign run by the nation’s largest cable and phone companies, which have opposed the idea of municipally owned and operated Internet service. Companies such as Comcast and AT&T view these low-cost local municipal competitors as a threat to what they believe is their rightful broadband monopoly businesses. Already, there have been lawsuits, lobbying and legislation against such municipal Internet services.

As a result of this pressure, cities are now seeking a more corporate-friendly approach to provide what should really be a public utility operated for everyone’s benefit. Too many local governments are embracing a model for Wi-Fi, says advocate and expert Sascha Meinrath, that creates a system more favorable to “billable moments” than one designed to truly connect communities together.

Instead of creating yet another e-commerce stomping ground, San Francisco and other cities should understand that real alternatives do exist to the corporate model of municipal Wi-Fi being peddled by Google and its cohorts. It is possible to develop community networks that reflect our highest principles, including the right to personal privacy, and the cost of building such networks can be very low. There are already successful publicly supported models. St. Cloud, Florida, a city of 30,000, has built a free Wi-Fi service for its residents, seeing it as an important public service. The city has been able to build and operate the network, reduce its telecommunications costs and generate new economic opportunities.

Building a Wi-Fi network this way brings in economic development and saves the city money on telecommunications. At a time of growing media consolidation and emerging threats to the future of the Internet, America needs to create online systems that are democratically run and commerce-neutral, that protect the privacy of the citizens they serve.