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Figuring out FON

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Free Wi-Fi and millions of dollars from well-known investors usually are things that are not mentioned in the same sentence. Spain's FON is trying to change that. The company is attempting to leverage the noble aspirations and positive communal feelings of free Wi-Fi and match them with global network scale and a clear corporate revenue model.

Others have tried and failed at this (think Cometa Networks), but FON puts a different spin on previous attempts by harnessing the power of users themselves to create the massive network. The company touts a tiered membership model that includes Linuses (named for Linus Torvalds), who install FON's software on their routers to spread coverage and are supposed to let other Linus-level members use their coverage areas for free; Bills (as in Gates), who are similar to Linuses but participate in a FON revenue-sharing system that gets its revenue from the members of its third level, Aliens, who pay to connect to FON coverage offered by Linuses and Bills.

Companies like Google and Skype believe this will work, and that's why they joined other investors this week in investing more than $21 million in FON.

However, it remains to be seen how valuable even a global-scaled FON network would be to any of these members. Linuses certainly will benefit as more users sign up to be Linuses, but if these are people who like the idea of free Wi-Fi, wouldn't they want it to be free for all users? Bills need to see a large number of Aliens pay for a connection to make the concept worthwhile to them. But for Aliens to want to connect, they need to know that FON coverage is in places where they need it to be. You won't see FON coverage in a Starbucks or a major hotel chain, and likely not in a major airport. Even if a lot of businesses and residential users sign up to be Linuses, coverage may not be convenient enough to be worth a fee--or maybe it will--the point is that all this remains very unclear.

The obviously ironic thing about FON that it employs the names of the king of open software and the king of proprietary software alongside one another. But there's a reason why Linus stands for one kind of idea and Bill stands for a completely different one.

E-mail me at DOShea@prismb2b.com.

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© 2008 Penton Media Inc.

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