Dive Brief:

• The Pennsylvania Department of Transportation (PennDOT) has warned that kiosks installed by the city of Philadelphia to provide wireless internet, mobile device charging and phone services may violate rules against advertisements along state and federal roads, the Philadelphia Inquirer reports.
• In a letter to Philadelphia’s mayor and city council, the transportation department said ads displayed on the LinkPHL kiosks could cost the city millions in federal funds. The kiosks display local information, including weather and local facts, and are supported by ad revenue.
• The letter from deputy secretary for highway administration George McAuley asks that PennDOT be consulted "prior to authorizing installation" of future kiosks.

Dive Insight:

Philadelphia first started installing its LinkPHL kiosks in downtown areas in December, with plans to install 100 in total. It followed installations by advertising and media company Intersection in New York, London and Newark, NJ, where the kiosks have proven to be popular in getting residents online and broadcasting information. Retail businesses in Queens, NY reported an uptick in visitors after they were installed, and ad revenue has helped generate millions of dollars for cities.

However, it’s that ad revenue that may get Philadelphia in trouble, thanks to a law that bans most forms of advertising along certain roads, including some of the busiest ones going through the downtown neighborhood known as Center City. A failure to regulate advertisement on “controlled routes” could leave the state subject to losing 10% of annual federal highway funds, as much as $610 million for Pennsylvania. They could also be barred from spending money inside cities that fail to regulate their own ads.

It speaks to the larger debate that cities are having over the value of ad-funded smart cities projects, which can bring in revenue and defray the high cost of new technology, but can turn off consumers and residents. Besides being occasionally unpleasant, TechCrunch points out that having brands on smart cities technology can raise concerns with some residents about who is keeping track of their data.

In a previous interview with Smart Cities Dive, Edward Krafcik — vice president for city development for Soofa, which produces ad-funded signs for cities — said there is a path forward “where an advertisement-supported amenity like a Soofa Sign or particular community bulletin board can be funded sustainably.” That, Krafcik added, could result in “an advertising-funded asset and amenity that feels a little bit more like Instagram, where you see companies really being more creative [and] thoughtful because they want to feel like they’re natively part of someone’s feed.”