In addition to what Alidar Jarok said. Radio is a one way system, unlike internet and telephone. AM (Amplitude modulation) and FM (frequency modulation) are waves that are intercepted by an antena. Those waves are then electrically amplified to kick a speaker. The speaker kicks, you hear sound. Carrying digital data is far more complicated, requiring a much higher magnitude of wave, and requiring frequency bandwidth. As it is now, we are running low on wifi bandwidth and will hit our limit in 2 to 5 years. Though building a system upgrade is still possible. Keep in mind that wifi has got to be carried by transmitters to towers, that send signals to satellites, in order to reach the end user (since no FFC approved device for the general public allows sufficient amplitude to deliver a signal to a satellite). This network of relays is big money, unlike a short wave radio. Commercial radio is expensive, and paid for by advertisements. I'd really hate for ISP's to start bombarding us with advertizements. Imagine going to a website, closing the pop up, waiting for the flash object commercials to load up, looking past all the embedded commercial text, and then from your ISP comes 5 minutes of commercials blocking your screen as if your monitor were a television. I'll stick with paying $55 a month, and occasionally clicking an advertisement and giving it a look, just so the web master of a site can collect a penny for me clicking an ad. I can handle this, I rather like web 2.0 and my corporate government hybrid ISP. Oh, and by the way, it is nice to click on an advertisement now and then, and give it a look. If you see an add that looks even remotely interesting, just give it a click if you want to help support your favorite websites. I recently clicked an ad for Amanda Palmer's new CD, that I found on this website, because I like Amanda Palmer. I am seriously considering buying her new CD.
In the long term, the way we'll probably get around the RF bandwidth limits (which are physical) will come along some years after we've switched almost entirely to LED lighting. LED lighting systems can carry a piggybacked Internet signal that can be branched building by building, room by room, even more precisely than current WiFi signals, and carrying almost as much data as a fiber. That would clear the spectrum of the download bandwidth of people who are indoors, while user's uploads could remain non-directional RF to the receivers in the lighting system. LED's are already competittive with street lights (even at current prices and performance, their lower maintenance saves cities money), so the system could be extended to cover the outdoor areas of most cities. Since the streetlights would already be wired up to carry signals, the signals could carry WiFi/cell repeater during the day or to users who aren't picking up the lighting signals, making the current antenna grid vastly denser. Instead of using WiFi as the model (where you have to connect to a particular wireless network), the system would be a dense, miniturized version of a cell network, where the antennas track users and hand them off to other antennas. In this application, an antenna would try pinging the user optically (via the LED) and if that doesn't work it would try very short-range RF. That would clear almost everyone in cities from the current networks, leaving the existing system for rural areas and highways. Getting to that level is going to take a lot of time and investment. The communications industry (ISP's, etc) would have to coordinate with LED lighting manufacturers (the signal switching speeds probably requires RGB leds instead of white from blue/phosphor), and the LED controllers would have to include modems and other very sophisticated electronics. Then they'd have to coordinate with municipalities and business to run the signals all through the streelight system, and the entire industry would have to come together on standards and spectrum allocations. ETA: Oh, and there's also the issue that LED transmitters and receivers aren't able to use frequency selectivity like an RF signal (with LED's, only a few colors are available, so you can't frequency hop up and down the "blue" spectrum). So if you have two rooms where the lighting overlaps, the rooms have to either use different colors (red, green, or blue) to avoid having an area where the signals walk over each other, or time-division multiplexing where "blue" isn't used at exactly the same time by both rooms. That means the equipment has to figure out how to detect and correct overlaps via switching colors or multiplexing, otherwise the electricians installing the system have to constantly solve the three-color map problem on the fly, which isn't going to work very well.
I was using radio as an example of an existing service being free to the consumer/listener, not comparing the technologies employed. That wouldn't make any sense, as they're entirely different (as pointed out, one is one way and the other interactive). True, radio is not free for the broadcaster. And revenue is made via commercials as well as sponsorship. With "free" Wi-Fi, I could see a mandatory app required to be run in the browser that will layer over your viewed content which you'll have to watch periodically, and anything that blocks them would suspend the Internet connection. That could probably work. But ultimately as the infrastructure becomes more optimized, the overhead costs will shrink quite a bit.
^ Besides which, that would be a highly invasive way of generating revenue and would turn a lot of people off from that service. Add to that the fact that advertising don't have any common fucking sense and will inevitably push that advantage WAY too far, producing mandatory ads that either hang your entire device for fifteen minutes or take nearly as long to finish loading just so you can skip them and access the internet. In the end, though, I think rising prices and increasingly bottlenecked accessibility will keep on creating cheaper alternatives which the larger ISPs will have to compete with eventually. Deriving revenues from controlling ACCESS is ultimately untenable, which is why alot of the larger companies are doing increasingly sneaky and back-stabby things to stake claims to popular content (witness the licensing war between Hulu, Netflix and Xfinity right now).