In the U.S., most ISPs contractually prevent you from sharing the excess bandwidth in your home connection. But on Monday, Time Warner Cable and FON, a Spanish company, announced a deal in which Time Warner broadband subscribers can gain access to a growing network of free Wi-Fi hotspots in exchange for making their Wi-Fi bandwidth available to others.
"Foneros" are the name that FON gives to its members. They share their excess bandwidth with others in the community, via their FON Wi-Fi router. "At home, you're Wi-Fi king," the company proclaims on its Web site. "But away you become a Wi-Fi beggar. Share some Wi-Fi at home. Get free FON Wi-Fi around the world." FON said that it is the largest Wi-Fi network in the U.S., with some 60,000 community members.
The La Fonera 54 Mbps router has two separate channels. One is a secure channel for the owner, and the other is for wandering Foneros. Foneros decide how much bandwidth they want to share, and they can personalize the login page.
A 'Social Router'
The La Fonera router, which the company calls a Social Router, attaches to a broadband Internet connection and becomes a FON Wi-Fi access point. It currently supports 802.11b/g wireless. The company said that it has distributed about 370,000 routers worldwide. Time Warner Cable currently has 6.6 million residential broadband customers.
The company identifies two other classes in addition to wandering Foneros, who access fellow community members' routers. One of the classes is "Aliens," who aren't actually members of the community, but can gain access to the network with a Day Pass rate of $3.
The deal with Time Warner is only for residential users, but FON's Web site notes that its communities elsewhere harbor businesses, called "Bills." They get 50 percent of the Day Pass charges through their router, and can advertise their business on the personalized login page.
Although the cost of the La Fonera router is not specified in the announcement, some reports indicate that it would be $30. Joe Laszlo, an analyst with Jupiter Research, said that a price in the range of $20 to $30 "makes sense." It might even be given away as an added value, he noted.
The Time Warner cable deal, he said, "is great validation for FON as a business model." In the long run, he noted, there are "lots of challenges" for higher-priced, on-the-go wireless access business models.
He said that there were a smaller number of people who were willing to pay premium prices for reliable, specifically located wireless access points than there were people who know they can probably find a free or less expensive connection if they look around.
FON's founder and CEO is Martin Varsavsky, an Argentine entrepreneur and philanthropist who has founded several companies, including Viatel, Jazztel, and Ya.com. Investors in FON, which was founded in 2006 in Spain, include Google, Skype, Index Ventures, and Sequoia Capital.