SAN FRANCISCO (Reuters) - Internet search leader Google Inc. and service provider EarthLink were selected to provide a basic free wi-fi Internet service covering the entire city of San Francisco.

Google (Research), which gets for 99 percent of its revenues from advertising, hopes to defray the costs of offering a free service through contextual advertising.

Google says users linking up with wi-fi transmitters placed around cities can be located to within a couple of blocks. This would open up a new level of advertising opportunities for the company, allowing it to serve tightly focused ads on its web pages from local businesses in the immediate area.

The Department of Telecommunications and Information Services said late Wednesday that the city will begin contract negotiations with EarthLink (Research) and Google.

EarthLink and Google are working with wireless equipment suppliers Motorola (Research) and Tropos Networks to construct a mobile network for residents, businesses, municipal government and visitors.

EarthLink also has been selected to build a municipal Wi-Fi network for the city of Philadelphia, and more recently, for Milpitas, California, in Silicon Valley.

Donald Berryman, president of EarthLink's municipal networks unit said in a statement: "We look forward to taking the next step to negotiate a contract to build a municipal wireless broadband network."

--------------------

Good old-fashioned outdoor advertising has made a big comeback, click here for more.