San Francisco may be able to build its own citywide Wi-Fi network, according to a budget analyst’s report that also raises concerns over EarthLink’s plan to build a network at no cost to the city.

The city’s Wi-Fi initiative, spearheaded by Mayor Gavin Newsom, has come under fire from activists and some members of the city’s Board of Supervisors, which must approve the plan before the network can be built. Among other things, they have said not enough consideration was given to a city-owned network. As Newsom’s administration negotiated a contract with EarthLink to build and run the proposed network, the board last year asked its budget analyst to study the feasibility of a city-owned system.

San Francisco has been a lightning rod for debate over municipal wireless networks, which are being proposed in a growing number of cities. The report encouraged Supervisor Tom Ammiano, one of several members who has concerns about the EarthLink deal. He doesn’t think Newsom’s plan will pass unless at least some aspects of municipal ownership are added.

Newsom’s administration and a majority of the board will need to find common ground, Ammiano said.

The report didn’t recommend a particular kind of network, but it said the fiscal impact of a city-owned network could range from an annual funding shortfall of more than US$1.4 million to a net gain of more than $900,000. Owning the network would give the city control over what services are offered and make it better able to offer services to disadvantaged residents, but San Francisco would have to find the money to pay for the system, said the report by Budget Analyst Harvey Rose.

The report also slammed some aspects of the plan EarthLink proposed last year, under which the ISP would offer a 1Mbps service to paid subscribers while Google operated a free 300Kbps service. The city and EarthLink last week agreed on the final terms of a contract.

Because it would operate throughout the city on unlicensed frequencies, the network would limit potential wireless competition, the analyst’s report said. Google, or whoever operates the free service, would have exclusive access to users of that service, the report said. In addition, EarthLink might have a conflict of interest because it could both sell wholesale access to other service providers and compete with them for subscribers. The report also raised concerns over EarthLink’s policies on use and sale of information about its subscribers, an issue that has been raised by some activists.