Fon, the Spanish startup that wants to bring free WiFi across the planet, just raised $9.5 million (six million Euros) in a C round led by Coral Capital Management. Also investing was British Telecom (which struck a distribution partnership with Fon last October), Google (a previous investor), investment bank Allen & Co., founder Martin Varsavsky (through his Jazzya holding company), and Joi Ito (through his investment vehicle, Digital Garage). That brings the total raised to more than $50 million (34 million Euros).
The way Fon works is that you set up a Fon WiFi router at your house or business and you can either give WiFi access away for free to other Foneros in exchange for free access when you are roaming about, or you can charge people for access and get 50 percent of any resulting fees. Fon says it has 170,000 active routers worldwide, with the leading countries being the UK, Japan, France, Germany, and the U.S. (in that order). In the UK alone, there are more than 70,000 BTFon members. By linking up with the telecom companies (Fon also has a partnership with Neuf in France), Fon gives them a way to offer their customers roaming broadband service. Fon is preparing to launch in Russia with a telco there called Sistema, whose largest shareholder is Coral. Says Varsavsky:
As far as our strategy, more and more we are collaborating with large telcos, which pundits wrongly thought were going to be our enemies. And that is because we have proven that a Fonero is a more loyal bandwidth customer as he gets to roam for free.
He plans to use the new cash to launch Fon in Russia this June, and to put out a new version of the Fonera router (also in June). The Fonera 2.0 router will come with a USB port so that members can connect it to a hard drive and upload photos and videos to the Web, download movies, or otherwise manage their media on online services. And in December, Fon will release an 802.11n WiFi router.
(Varsavsky also recently launched Twixtr, a side project that is like Twitter with photos).
It seems that there a lot of new startups working on free Wi-Fi access. My friend from Boston College is starting a company, Anaptyx, that is aiming to provide free community Wi-Fi. They were just featured on College Mugul here:
http://collegemogul.com/2008/0.....s-of-wifi/
They are also working on a partnership with Meraki too.
Very promising…
I am sure the Russians will welcome another free WiFi service
Neat idea…
this is gonna be the death of telephony as we know it: having this cool idea materialized, just get an internet-enabled phone and you are connected!
No need for cell phones, no roaming fees whether you are in the US, Japan, Europe; no need for a home phone, no long-distance fees… Pdetty fdiggin’ good!
I used to think was the most amazing idea - truly revolutionary. The problem in my opinion is that you can’t build a network effect strong enough unless you have access available for everyone. For example, even if I would sign up to Fon today (I already have an account) I might not be able to take advantage of the network effect despite around 1 million Fon routers out there. There just aren’t enough of them.
The other problem is that data over cellular networks is getting cheaper at a pace people didn’t really imagine would happen. This is especially true in Europe.
Finally, the previous benefits of Wi-Fi over cellular data is slowly disappearing. It used to be a lot faster, it still is but speed is getting less relevant as the cellular networks speeds are increasing. At the same time the mobile data over cell networks are usually available everywhere and Wi-Fi remains not
Erick Schonfeld
Can you explain to us what do you mean by C round ….some people might not know but are interested.
@gustav: did you ever see a nintendo ps with GSM card in? did you ever see an mp3-wifi-player with GSM-card-inside? so, not all is about talking… but a lot
FON is a dead end company. Their revenue model is terrible (3 dollars/euros/pounds per day), they offer highly subsidized routers (they surely lose money on each sale), they provide users with no incentive to create high-quality wi-fi hotspots (you can set up a fonera router in the boonies and get free wi-fi from FON without ever offering their wi-fi in return to the community) and what little business they have is soon going to disappear when 3/4G wireless data becomes ubiquitous in a year or two and everyone has the service built into their phone/laptop/MID.
I was a big supporter of Fon when they first came out and still use their router (note that the Fonera is solid but the Fonera+ is a piece of junk that requires a weekly, if not more frequent, reboot). However if you read their forums there are tons of users with complaints and Fon has no intention of improving their business model to benefit their wi-fi providers and customers. There current business model as can be seen today is to pump and dump. They are simply trying to artificially increase the number of hotpsots and get third parties to invest in them and then hope that they can dump their company on some stupid company that will be enticed by the number of hotspots (even though the majority of them are non-functioning).
Great idea.
-To make money online
http://mikesmoneyclub.blogspot.com
I do not understand who is their target audience in Russia. The person who benefits most from Fon is someone with a notebook who travels a lot and works from home. In Russia, notebook in 95% cases is given to user by his employer, and people who actually roam the city (let alone the world) are very scarce.
Selling hotspot space is a tricky proposal, because, technically, in Russia it will mean rendering illegal unlincensed telecom service combined with unauthorised entrepreneurship - which is a misdemeanor.
FON is a genius concept. And I expect that it will soon also include HSDPA Fem2cells and 700Mhz WiMax as well. Just release new Fonera routers with different wireless technologies such as HSDPA and 700Mhz as well as the WiFi, this makes it the most effective, and the cheapest way to deploy wireless broadband networks with enough bandwidth for everyone in every nabourhood streaming HD quality videos, doing high quality HD video broadcasting and HD videoconferencing on mobile devices. Even the 700Mhz network that Verizon just bought isn’t going to be fast enough for super high speed broadband. The limitation is that every cell tower has a limit of global bandwidth that it can deliver, no matter the bandwidth that the technology supports, be it HSDPA or LTE. So the FON model is the only way to bring a cell tower that broadcasts not only WiFi but also other wireless signals and have at least one of these in every nabourhood, in every building. Even Google’s white spaces system can use this model.
This article has a few errors in it:
- There are closer to 1 million active Fon hotspots today, not 150 thousand especially thanks to British Telecom and Neuf partnerships which add FON to British Telecom’s and Neuf’s already deployed routers and WiFi enabled ADSL2+ modems through automatic remotely installed firmware updates).
- Every Fonero earns money today, FON changed their system about 6 months ago, so you don’t jhave to choose if you want to provide your hotspot for free to get access to all other FON hotspots or if you want to only earn money. Now every user is able to earn money and access 1 million FON hotspots for free at the same time.
MikeT: Do you realize that in many cases, it’s the same telco providing the copper that would eventually run such wonderful services? You simply cannot destroy the service you use to give your own service on top of. Besides, current WiFi-enabled phones have an average life of 3 hours while using WiFi, which is not terribly useful.
Charbax: Did you forget that BTFON users have to actually -opt in-, it’s not like they magically converted all the users into sharing users. Martin’s official figures are 70k BTFON spots.
On the money earning side…FON is allowing more and more services to be accessible without having to login and/or pay, for example, Google, GMail, and others. This means zero revenue for the sharing user should someone check his email all day using his broadband connection.
I agree with Gustaf that the penetration of any such initiative must reach a high critical mass, and achieving this through highly subsidized hardware which the end users control is not particularly easy. Until for some reason (I guess it involved some ‘influence’ from Martin V.) Francofon shut down its statistics page, it was showing just over 70k Foneras online *total*. This means millions of dollars wasted in boxes that are unlikely to be switched on again.
Mr. Varsavsky has already said in his blog that his plan is to sell FON within a couple of years. So that’s all he’s building: something he can selll in 2 years.
Something wrong with that? Nope. Just don’t assume he’s trying to build a sustainable business. Just a fruit ripe enough to get it sold. And if that takes a D, E and F round, so be it.
I mean, you’ve got to admire his honesty. How many enterpreneurs will tell you “my goal is to sell this in two years?”. Not many…
FCrew the story of selling Fon in 2 years started with a journalist who asked me, would you sell Fon? And I said, I would not consider it in less than 2 years cause I need at least 2 years to build a solid company. And he wrote a headline in Expansion saying that I will sell the company in 2 years. But in any case what was was wrong when we built Ya.com for around $50 million and sold it for $750 million to T Online and the employees got good jobs with T Online and made around $100 million for themselves? And if we do sell the company in 2 years to Google, Microsoft, Vodafone, Telefonica or British Telecom what would be wrong with that? In any case for now we have to make http://www.btfon.com and other fascinating projects grow nicely. We have tons of work to do at Fon.
I sincerely apologise for wasting your time by posting a comment. I thought you were a legitemate blogger, but I see you are instead a lousy sock puppet. Hope that free router martin gave you was worth it.
Your description of “how Fon works” suffers from the same misunderstandings which most of these articles do.
Free wifi is given to Bills/Linuses who maintain Fon hotspots, when they are at other Fon hotspots. Fon does not actually let you give your wifi to the public for free, though there is a free 15-minute trial option, if the public watches an advertisement video from Fon. You can also assign a special, free username and password to people you trust, or just give them the encryption key to the private SSID. This does not include BTFON hotspots, which are native BT routers with a firmware plugin. BTFON hotspots are unequal to native Fon hotspots, and really should not be considered part of the Fon network.
Except for trial connections and “Friends and Family” logins, Fon *always* charges the public to connect to Fon hotspots. It is not a basis to provide free wifi to people visiting your home or business.
Fon resells your Internet connection to the public, whether you are a “Linus” who waives any profit, or a “Bill” who receives part of it. Fon does *not* give %50 of what they collect to the “Bill” hosting the hotspot. Fees and taxes are taken out first, and given to governments and/or partner ISPs. This amount varies and Fon does not disclose it. The remainder is “split” between Fon and the “Bill”. This is a very important distinction.
Fon does not let the host set his own fees, to be competative in his region. $3/day may be very cheap compared with 3G and other cellular data plans, but it cannot compete with free wifi that is available everywhere. Fon needs to provide an added value, like VPN service to secure the vulnerable public wifi connection.
Fon’s wifi system is an imitation of many “wifi-in-a-box” packages that have been available for years. Their only actual service is to maintain the login gateway, and collect and distribute fees. For this, they really are asking for too much to keep over half of the fees, and dictate all of the terms. Their only unique business creation is the database of public email addresses of visitors who are willing to pay for wifi at Fon’s price point.
Fon’s actual membership size and network size is a point of great contention, as Fon takes deliberate action to conceal the number of routers which are really still online. If you have operated a Fon hotspot, you must follow a formal process to have Fon take your icon off from their map. Otherwise, they still count you, in their media and investor statistics, as an existing resource.
It will be interesting to see how Fon plays in Russia. Fon needs to set up a Russian-language blog and discussion forum, and conduct in-person promotions there, in order to nurture a community. They still have not provided blogs and discussion forums for some of the languages which are native in their most popular European countries!
It hearted me a lot becasue I had planed this thing but i could not start it.
Can I use this idea to start my company in other countries?
Is it copy right protected?
Is there any possibility to lauch similar plan in my country(Pakistan)?
I feel sorry for FON (not for Martin Varsavsky, he is way too rich! :-))
Fon team (en, ju etc) in US for the last 2 years has failed Martin.
It sounds great, and all future plans published by MArtin seems to be great, new 2.0 utilities fot Foneros, more agreements like BT or Neuf….
Good news
http://www.enriqueburgos.com
As to allowing people to set their own prices in Fon that would destroy the concept of a wireless network with predictable pricing. http://www.fon.com is very simple, you buy a Fon router called Fonera that mainly gives wifi to you over an encrypted signal or SSID, then you select with a bandwidth throttle how much bandwidth you want to share, and the Fonera WiFi router creates another SSID that is called Fon and others connect to this SSID. So Fon is a safe way to share bandwidth and with Fon you are never depleted for donating too much. With Fon you get bandwidth for you as if you had bought a Linksys, but then you are nice to others (whether you charge them or not) and you can roam the world for Free. Having said all this it is true that Japan, UK, France are way ahead of USA for Fon. This is mostly because USA is an incredibly monopolistic country both in the telco world and in the retail world. Few telcos and few retailers control what most Americans consume and if you can´t connect to them you are out.
Martin,
could you answer me to this as well?
a) legal aspect: Every fonero shares bandwith, 90% of them are not allowed to do so by their contract with their telco. Telcos do not care as long as you: pay nicely and dont jeopardize their income. Well, its a mobile world and telcos will go mobile. The moment Fon decreases their mobile (WiFi, HSDPA whatever) income substantially they will go after Fon.
b) Exit strategy: IPO? IMHO definitely not possible. Trade sale? Yes, to a Telco. Guess what all other telcos will do: Exactly. Cut the lines to private Fon providers, since they are left out. Financed by own cash revenues? Well, well, not at that development speed and the few $ revenues.
Movimento Phoney!
These days, Martin always starts out by saying “first, you buy our router…”, and it didn’t start out that way.
When Fon launched, it was about downloading their firmware and joining a Movement, building a Community, and maybe making a little money while enjoying the perks of participating in something. Now all Fon does is hawk their proprietary merchandise and make deals with monopolistic ISPs which inevitably involve Foneros obediently giving additional wifi to others for free.
It is improbable that anyone will find another Fon hotspot to use while roaming, and Foneros are unlikely to make any money hosting them, but Fon has their merchandise profits, and takes their lion’s share of the connection fee, and so they won’t let anyone change their ways. Fon routinely makes choices which are not in the best interests of the Foneros who volunteer their locations, time and Internet service for Fon’s profit. The system is intolerably gamed to pay Fon, and only Fon. BT and Neuf partnerships won’t bring Foneros more money, it only brings us more freeloaders. We’re chumps!
Foneros won’t stay with fon for such pittances as $.48/per daily pass sale, or over fear of losing roaming access to 70,000 inacessable Fon hotspots (not 140,000 as Fon incredibly claims). These days, Fon spends as much energy in suppressing their critics as ordinary companies do in pleasing their customers.
Do these new investors realize what Fon will fritter this money away on, while it’s core product and it’s popularity stagnate? I wish *I* could get paid $100 million dollars to jet-set around the world (preferably scenic locations) and give short token presentations where I skillfully mis-describe my system for burning through seed money while I skim off the top.
Foneros have no use for Mexican waves, link sorteners, disoriented bullfighters or Cher impersonators, Babe! No Fonero has asked you for these things! You need to spend Fon funds to finally address the issues you’ve ignored for over two years, and not on non-wifi related projects that surely reflect your future business endeavors after selling Fon. Foneros don’t feel entitled to Fon’s money, but with fiascos like these, why does Fon seem to feel entitled to Fonero’s loyalty?
We really want and need to personalize our login pages! Not simply pop a very short comment in small type, down on the bottom right and perhaps register with a couple of Fon’s partners to replace (but never the choice to remove) the default video clip and photo gallery links. The existing bloated, mandatory login page is 500K, unattractive on a PC screen, and cumbersome to use on a PDA.
We really need to access our existing wired LANs, and we don’t want to pay an additional $55 for yet another La Fonera with a single LAN port, and throw out our existing routers. We really need to clone our WAN MAC addresses so our ISPs don’t reject the router. Foneros are so impatient with Fon that they wrote much better firmware *in their spare time*!
FON IS NOT SAFE. The public hotspot is unencrypted, and that is that! El sniffo y passwords en plaintext! Comprende? Don’t stuff yet another bittorrent application into the router firmware! Put a VPN server in it instead. VPNs can terminate from local network and Internet at the same time, and thus create an entirely new product for Fon to sell. Fon, which is not now safe, could truthfully become so, and even provide a sellable security product to people using wifi everywhere!
One other point I forgot to touch on was to point out how carefully you see Martin describes Fon as being about “sharing bandwith”, and not selling it. If you’ve figured out how the system works, you will realize that Fon does not Pay Bill-Foneros for sharing their bandwidth. Nor for connection time or anything else. Fon Pays Bills for being the Point Of Sale of a day pass, and that is all. While that day pass is in effect, that Alien can roam to other Fon hotspots without trouble. However, none of these Bills get anything for providing service!!!
So Fon’s system is a poor choice (for Aliens) if there are few Fon hotspots to find, and a poor system (for Bills) if there are a lot of Fon hotspots around, since someone else is probably going to make the sale, and everyone else is going to be serving for free!!!
Fon needs to switch to a variable pay-per-minute system like most other hotspot systems and Fon’s partner, Skype. Pay-per-minute is a tried and true system which people are familiar with, and should not be portrayed as a flaw which Fon has overcome with their own system. Perhaps Skype can share their technology with Fon, if Fon cannot figure it out. Aliens don’t so much care if the fee at each hotspot will be the same amount, as long as they know that it is cheaper than alternatives, and the fee is posted on the login page.
Bills need to set their own choice of fees, despite anything Martin says, and Fon should only charge a simple flat fee for each sucessful connection, while providing billing and payout services for the Foneros, who are really franchisers.
Keef = AustinTx; insiders know him as a constant FON critic (with an unreached posting frequency of 4000, mostly negative statements) and: a board-moderator of a concurrent start-up.
What is your point? That if I don’t balance my thoughtful musings of Fon with praise, that none of my points are valid? LOL.
You forgot to mention that I have my own Fon-related blog. I would post here as myself, but somehow my name and the name of my blog, with various variations, are in this blog’s spam keyword list.
Mr. Varsavsky (#15), first, I do not read that newspaper you mentioned.
What I did read was a comment you wrote in your blog where you said word-by-word: “la venta la veo para dentro de dos años, cuando tengamos unos 3 millones de foneros registrados…” which it means, literally, “I see the sale two years from now, when we have about 3 million registered foneros..”.
You said that right there -> http://tinyurl.com/69ewbo , so it’s not about you saying something and then a reporter taking it out of context to make headlines.
The fact that you deny having said “I see the sale in two years” (despite you DID say it) and then go on telling us “what is wrong with that?” makes it clear that yes, that’s what you’re after, so why blame it on a reporter now? That’s not nice.
Second, you don’t have to lecture us about “what would be wrong with that? ” when I myself said in my comment: “Something wrong with that? Nope.”
Companies are sold, merged, acquired… But I stand by my comments. You’re not building FON because you believe in it - you’re building something that can be sold, and in the process you’ll “sell” it as a revolution - it isn’t, it’s a business. And I for one don’t like to be bullshitted about revolutions that are just smoke, that’s all.
So as I said, thanks for having the cojones to speak up and say “yes, I’m working my ass because I want to sell this thing in two years for many many millions”. I actually appreciate that. Just don’t deny it, ok?
@fcrew: selectively picking up words is really ugly; just read the whole sentence in its complete context; so no proposal has been made selling fon in 2 yrs. big nonsense. what is our real objective? not the truth, thats for sure. your aggressive style is very unpolite , btw.
“Fonera router” is not the best name for Russian market I must say. “Fonera” sounds like “veneer” which is widely used in idiom “his business flew like veneer in the sky” which basically means “failure”.
Martin has left the building. =P