Mobile network O2 has announced a plan to install free WiFi access across the London boroughs of Kensington, Chelsea and Westminster in time for the Olympics in July.

The company said it would start installing the necessary access points on street furniture this month after reaching an agreement with councils. No money will change hands.

The intended capacity of the network has not been made clear beyond the company saying that “it will initially be rolled out in a limited number of areas and then throughout the boroughs over the longer term,” and will involve installing “premium” access (as opposed to domestic) access points.

O2 launched its WiFi services almost a year ago with the intention of doubling the number of hotspots currently offered across the UK by rivals BT Openzone and The Cloud by 2013.

It’s not the only company trying its hand at free WiFi in the capital; last November Nokia and partner Spectrum Interactive announced a plan to trial free WiFi from 26 access points around central London.

Judging from the O2 announcement’s claim that its installation will be the largest free WiFi hub in Europe, the project’s ambitions are larger than Nokia’s, which still leaves unanswered the question of why offering wireless access without charge has suddenly become so fashionable.

One answer could be advertising embedded in the access in a year when London will be enjoying a huge boom in visitors. The boroughs chosen are also among the wealthiest in the whole of the Uk, prime territory to promote O2’s paid services.

As for data access on O2, the company has in the past been criticised for failing to invest enough in its data infrastructure, leading to outages and capacity problems during 2009. WiFi – even free WiFi offered to anyone – could be a way of bridging some of the gap in areas of high demand such as London.

“Only 20 percent of people who have access to free public Wi-Fi on O2 tariffs actively use it despite the majority of devices being Wi-Fi enabled,” said O2’s business development director, Tim Sefton.

“We know that Wi-Fi as a technology has great potential and can be a very fast service, however customers are discouraged by barriers which include complexity in activation, uncertainty of where Wi-Fi is free and the variable quality of the current experience.”

Accessing the free WiFi will require a sign-on process but would be auto-provisioned for all O2 customers by the end of 2012, Sefton said.