Start-up pushes global wireless network-sharing

With US$21.7m fund, FON is changing where and how people access internet

A Spanish start-up with financial backing from two of the world's hippest technology firms has a grand plan to change where and how people access the internet - and it is relying on a global community of grassroots activists to accomplish that.

FON is the brainchild of telecommunications entrepreneur Martin Varsavsky and seeks to create a global wireless network from Wi-fi hotspots owned by the company's growing number of 'Foneros' - FON members who make their wireless connection available to other users for free or for a small cost, say, US$2 per day.

The idea has its roots in the file and resource-sharing movement underlying the popularity of peer-to-peer networks. Just as peer-to-peer technology is increasingly used in legitimate businesses, so has FON's commercial potential attracted the attention of major industry players.

Google and eBay-owned internet telephony company Skype and venture capitalists Index and Sequoia Capital invested US$21.7 million in the business in February.

That funding brought FON some welcome attention and the number of registered global Foneros now stands at 64,571.

Regional Fonero leader Yat Siu, also chief executive of software firm Outblaze, said the movement was alive and well long before the interest from Google and other investors.

'Network-sharing appeals to bloggers and other technologists because it adheres to the principles of the social web and universal access to information,' Mr Siu said. '3G has not been able to deliver this, not so much because of a lack of bandwidth but because it is too expensive.'

The same description applied to current commercial Wi-fi hotspots, especially in airports and hotels where daily fees of US$15 to US$20 are not uncommon, he said.

FON's solution is straightforward. Prospective Foneros make a portion of their network bandwidth available to other users by downloading so-called firmware to their existing wireless routers, or via a so-called 'social router' pre-installed with FON software available from the company for US$5.

Once installed, Foneros choose whether to emulate open-source software guru Linus Torvalds or Microsoft founder Bill Gates. The 'Linuses' give up their bandwidth for free to other Foneros in exchange for free access on the FON network throughout the world, while the 'Bills' charge non-members US$2 per day to use their bandwidth and split the proceeds with the company.

But Mr Siu said FON's ultimate business model was far more compelling than mere router sales and revenue-sharing with its members - hence the interest from the likes of Google and Skype.

'Applications and devices are not going to be limited to sitting in hotspots,' he said. 'These days you have Wi-fi-enabled mobile phones, portable PlayStation consoles and even Wi-fi radios.

'What we are talking about is a network that could be truly ubiquitous and where a network is ubiquitous, that makes applications even more attractive. Think of a Skype phone.'

FON has already surrounded itself with some of the internet's brightest luminaries who appear to regard the Spanish start-up as an integral part of their eventual ecosystem. Even as the firm was in its early growth stage, for example, the location of Fonero networks could be found using Google maps, while the company shared revenue with its members using PayPal, also owned by eBay.

All of that may be good news for this cluster of internet firms and arguably even better for consumers.

It is more difficult to see how established internet service providers and fixed telecommunications firms will warm to subscribers reselling their bandwidth. Chinese network operators in particular are likely to be difficult to persuade, having blocked Skype in various provinces in the past on the ground that it piggy-backs their networks. China has 150 registered Foneros.

Mr Siu said FON would announce partnerships with broadband network operators and ISPs when the service goes live in Asia in the next three to four weeks.

'We are not in the infrastructure-building business and while some broadband operators may react negatively to begin with, increasingly they realise that partnering with us helps them to make their own services - in addition to driving up revenue - more compelling and thereby reduce churn,' he said. 'Having more people use their network will also improve their branding and attract traffic to their website.'