Last year Microsoft announced its intention to get into the municipal wifi market, which for those non-Americans is free public wifi for entire towns and cities. These networks are currently being built and tested by MetroFi in Portland and Oakland, and today Microsoft announced that it is teaming up with JiWire, a wifi advertising specialist, to monetize them.

JiWire’s CEO Kevin McKenzie has been talking to the press and explained that the MSN advertisements will be 30-second long ultramercials, as well as the traditional banner advertising used by Google on its own municipal wifi networks. Amazingly the eCPM on wifi network ads is between $35-$100, a much higher rate than typical internet advertising. This high rate is needed though, as CNET explains there are some significant infrastructure costs involved in setting up these networks. On the other side of the ocean, central London now has a wifi network although it is not free to use. The key issue is scaling these free wifi networks into the major cities, both in the US and abroad.

With Google not yet having a clear lead in this area, this could potentially be a very lucrative business for Microsoft and AdCenter has an important role to play. Under the wifi agreements, Microsoft is also expected to provide homepage content, which could help driver users to existing MSN sites as well as Windows Live Search. Additionally there is also a monetization project called MSN Shadow that is operating in this area, potentially with some Windows Live Toolbar integration. Until these networks start being rolled out in other cities however, it seems to be a case of “watch this space”.

(PS: Does anybody know what happened to the Windows Live Wifi suite?)