Governing.com says

Annapolis, Md., is close to becoming the first city in the country to offer free wireless Internet access provided by a private company and paid for entirely by advertising.

From the Baltimore Sun:

Nortel is providing the
hardware for the program as a partner and will get money only if the
advertising model works. Normally, the cost for setting up a wireless
network in Annapolis could cost as much as $250,000