what if we would look at social networks as something local?

this question aroused from the immense resentments caused by recent revelations of NSA ( et al ) data gathering mayhems and the notion that a lot of the became available to NSA because it is an US american institution dealing with US american companies, thus apparently easily getting access to databases. the inital reaction to this is, apart from using encryption and online anonymity technologies, to set up one s own icloud, dropbox, twitter, or facebook. this yields the problem though of creating social islands and at the same time posing a lot of insfrastructual challenges. a possible solution for this dilema might be to think of virtual social networks as a local phenomena ( again? ). what if a city ( if we d assume the government could be trusted ) would set social networks and run them. individually deciding and catering for its citizens data security?