Written on 11th September 2008
2 COMMENTS Robin Wauters, Next web enthusiast & Plugg organizer
FON, the Spanish company who wants to make free WiFi sharing ubiquitous on a global scale, has welcomed the 1,000,000th member to its community this week. Its members come from over 150 countries, which translates into 400,000 wifi hotspots worldwide, according to the company.
The concept of FON is based on the idea that anybody with a broadband subscription can join, simply by purchasing a special router which is sold online and through a network of partners. The router enables FON members to share their internet connection securely with the community and roam on all FON WiFi Hotspots for free in return.
FON boasts a sharp, experienced founder / CEO (Martin Varsarvsky) and management team, impressive investors including eBay/Skype, Google and Index Ventures and a high-profile team of advisors with many recognizable names like Loïc Le Meur, Esther Dyson, David Weinberger, and many more. In addition to that, FON has a number of strategic partnerships with telecom operators and ISPs including British Telecom in the UK, Neuf Cegetel in France, Comstar in Russia, and ZON in Portugal.
But an impressive group of people and companies backing up a good idea is not necessarily a guarantee for success. While FON achieving 1 million members is admirable, there are a couple of sidenotes to be made.
With over $50 million (34 million Euros) in funding, according to an April TechCrunch story, how come it took the company 3 years to achieve this 1 million members? How many hotspots are actually active, and how easy/hard is it really to find FON hotspots in and outside of urban areas? More importantly, is FON making money, and if so, are these revenue streams going to prove sufficient for the company to move to the next level or not?
Also, as Silicon Alley Insider points out, U.S broadband providers are starting to limit how much bandwidth their subscribers can use from their “unlimited” monthly subscriptions, which could make people more reluctant to share their Internet access. Who’s to say this trend won’t be followed by providers in other nations as well?
Some Foneros are openly criticizing the company and its CEO Varsarvsky for dabbling with side projects like FON Labs and Twitxr, dumping its own stock, censoring blog comments and not responding to criticism about the security of the FON routers. Also check out this post on WebWorkerDaily about ‘coping with FON-liness’ for reference.
And for balance, there are nice things being said about FON too!
Fon, the free hotspot provider that gives away free Wi-Fi routers and wants to build a worldwide, and free, Wi-Fi network has announced closing a new investment round. They raised $9.5 Million from a bunch of investors. The current shareholders (Google, British Telecom, Digital Garage and Martin Varsavsky) invested some but there is also a new investor involved: the US Venture Capital arm of Sistema, Russia´s leading telco. This also means that FON will start expanding into Russia.
Another exciting new plan is the development of a sort of personal proxy server built into a Fon Hotspot. It will up- and download content from the internet for you while you are doing other stuff. It will be called Fonera 2.0 and we can’t wait to get one for free.
And that might take longer than expected because Martin has announced that he is going to be a little more cautious with his money. No more free hardware and slightly higher fees will help Fon decrease their burn-rate from 1.2 million a month to $500.000 a month. There are also plans to upgrade to the updated WI-Fi protocol lovingly called ‘802.11n’.
There is no mention of Index Ventures and Sequoia Capital who invested in earlier rounds. These earlier rounds also brought in a lot more money so it is likely that Fon is less successful than they try to appear. It is very hard to find out how many active Foneros are currently active and estimations range from 125.000 to 1 million+. Fon is not very transparent when it comes to showing the number of routers which are really active. If you have set-up a Fon hotspot in the past you must enter a request to have it removed from their maps. If you don’t they still count you in their media and investor statistics, as a live Fon Hotspot. Of the Fon Hotspots that are actually live only a small percentage will be a an actual hotspot where people accidently stumble upon it.
As a former Wi-Fi Hotspot operator (sold my business in 2003) I’m not very optimistic about Fon’s future. The dream of having free and ubiquitous Wi-Fi everywhere is extremely alluring and it is clear and understandable that Fon has a large community of eager believers.
Fon makes for a great story but is that enough to build a business on.
Today Fon Japan and Livedoor, one of Japan’s biggest ISPs, announced they would start a partnership to connect their free Wifi access points across Japan.
Livedoor is coming out of some hard times after the very public and very dramatic securities fraud convictions that led to sentences for four executives in early 2007. Most notoriously, founder Takafumi Horie (aka: “Horiemon”) was famous for his brash and aggressive business style and bore the brunt of the blame for the charges brought against the company. Even so, Livedoor still has its sights on going public in 2008. The Fon deal would appear to help their expansion. Fon, launched its wireless network in Japan in late 2006 and is currently the biggest wifi network globally.
The deal lets Livedoor customers connect to Fon’s 31,000 access points around Japan (as well as 240,000 globally) and also for Fon users to connect to Livedoor’s network which is primarily centered around the inner Tokyo area and currently has about 2,200 access points. The combined service will be free until at least the 4th of August, 2008, but there are plans to continue the service as free after that time as well.
The catch for the general user is that you have to be a member of either the Fon network or Livedoor. But from my initial checking, it doesn’t seem to be such a big deal to join. To become a Fon network member you need to buy a base station and share a Wifi signal yourself (thus extending the network). However, the simple way to access now seems to be through Livedoor where it looks like a regular login account to the Livedoor portal should get you in.
In september Fon, the free Wi-Fi initiative backed by Google, Sequoia Capital, and Index Ventures, launched a B2B program in an effort to get more coverage in densely populated areas. It promised 50% of all revenues to FONtrepreneurs willing to buy a marketing starter kit to promote and sell FON. This kit included 3 La Foneras, a Fontenna and flyers which people could use to persuade local cafés and bars to offer free Wi-Fi.
Fon has always been promoted as a community effort with hundreds of thousands of happy and cooperative members. So this should have worked. But the program has been terminated before it was launched. Here is why:
Fon originally invited 860 people from 5 countries: USA, Canada, Belgium, Holland and Germany.
Of those, 39 people replied and showed interest.
Of those, 13 people agreed to go through the legal loop holes that the laywers required.
Of those, 5 used the promo code
Of those, 2 immediately put the La Foneras for sale on eBay
Oops!
It is hard to estimate how successful Fon REALLY is. They have previously claimed 200.000 hotspots worldwide and Fon’s founder has a full-time job talking about the imminent success of Fon at every major conference in the world. But how many of those hotspots are connected, active and available for other people is anyones guess. Judging from Martin Varsavsky’s ever present smile all is fine and dandy in FonLand.
Here is an interview with Joanna Rees, the US representative for Fon including a few critical questions at the end of the interview.
Written on 11th September 2008
2 COMMENTS 
FON, the Spanish company who wants to make free WiFi sharing ubiquitous on a global scale, has welcomed the 1,000,000th member to its community this week. Its members come from over 150 countries, which translates into 400,000 wifi hotspots worldwide, according to the company.
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