History tells us that when you give someone a personal product it sounds the death knell for the public equivalent, even if the quality of service is worse. The use of public telephones declines dramatically as mobile phone penetration grows. Clearly the analogy isn't quite a fair one. Public telephone boxes were never truly located where you wanted to make a call whereas the mobile phone always was. WiFi, however, is more often present in those places where users want to access web services, so it should have a longer shelf life. However, to mitigate this aspect in WiFi's favour, there will be substantial user push-back against paying additional charges for WiFi when they have an existing mobile broadband subscription.
So, the future of public WiFi is two-fold. Firstly it will be given away free by hotels, restaurants etc as an additional benefit of using their facilities. For 5 years or so people have been predicting this as the route for public WiFi. Mobile broadband will make it a reality. Secondly it will be a differentiator for mobile broadband offers, giving better in-building coverage in certain hotspots. We have already seen several operators including O2 and T-Mobile bundle WiFi access in with their mobile broadband contracts. It represents a strong way of differentiating the offer.