Internet service companies and VCs invest in the concept of international community Wi-Fi.
February 6, 2006
FON Technology, a Spanish company that introduced bandwidth sharing to the world of Wi-Fi, said Monday that Google, Skype, Index Ventures, and Sequoia Capital have invested $21.7 million in its populist movement. The Madrid-based startup is creating a worldwide community of Wi-Fi users that share their bandwidth with each other. The magic sharing ingredient is a software download from the company’s web site, à la its new investor Skype. Users interested in becoming Foneros, as the company calls its registered users, can download the beta software from the company’s web site onto their Wi-Fi routers. The software works with some routers to create the capacity for bandwidth sharing. The software currently works on Linksys WRT54G/GS/GL versions 1x to 4x. The company said it is working on adding other router models to its list. FON also sells routers with its software preinstalled on its web site. The company also points users to FON-compatible routers in specialized stores. The idea for Wi-Fi bandwidth sharing is not new. It has been proposed in a number of areas including New York City, but FON is international in its scope and sees itself as more than a community movement. “This is a great idea and I see why Skype and Google are interested in it,” said Henry Stevens, principal of Adventis, a Boston-based consultancy. “Any innovation that makes it easier for users to access Google’s or Skype’s services grabs the interest of these companies. “At some point the big broadband players such as telcos or cable companies will begin banding together to offer their users this kind of community access,” he added. “If I am a Verizon user, for instance, I should be able to access my broadband service from places other than my home.” Shares of Google rose $3.55 to $385.11 in recent trading, while shares in Skype’s parent company, eBay, climbed $0.25 to $40.83.
A FON Business
The company sees FON as a business opportunity for some of its users. It divides its users into categories. A Linus is a user who is sharing his or her bandwidth in exchange for the international access to the community network that it affords him or her. The company has another category of users called Bills. Bills are users who prefer to keep a percentage of the fees FON charges to the third category of users: Aliens. Aliens do not exchange bandwidth. They just pay to connect to the network. “It’s an interesting concept—an organic WiFi community-based network,” said Peter Gorham, an independent wireless industry analyst. “That has been an objective of some people in the Wi-Fi market for awhile. This allows for some people to earn some income. “I could see hotels and other commercial entities signing on for this,” he added. “It gives them an international Wi-Fi network without tying themselves to a single provider.” FON protects the shared network through local passwords that a registered user can change, so users don’t have to worry about another member of the community using his or her bandwidth for nefarious purposes and then having it traced back to the bandwidth’s owner rather than the current user. “That would be one of my major concerns, but as long as the actual users can be identified on the network I think it’s a very interesting concept,” said Mr. Gorham. FON is the brainchild of Martin Varsavsky, an Argentine entrepreneur who founded Viatel, Jazztel, and Ya.com. “The success of FON, like the success of all online communities—such as eBay, Skype, ICQ, IM—depends on many people joining,” said Mr. Varsavsky, chief executive of FON. “At the very beginning, when there are no obvious advantages to joining FON, it is not so easy to get Foneros, even though the service is free.”