FON Wi-Fi service

by Michael Alderete on 8/26/2006

Back in November 2005, Robert X. Cringely wrote about something he alternatively called the Google Cube and the Google Box. Bob’s description of the Box’s capabilities and Google’s plans for it were rather grandiose, but buried at the end of the column was something I thought was a solid business idea:

The Google Box mesh network can reach out to nearby neighbors, too, bringing them onto the Internet in a way that would be difficult to stop or control even if the broadband ISPs wanted to, which they won’t, because Google will find a way to share the wealth with them. It is not in Google’s interest to put out of business any ISPs, so they’ll try hard not to. But it IS in Google’s interest for there to be universal broadband coverage, which the Google Cubes will, for the most part, enable.

When Google announced their intention to submit a proposal to provide wireless service within San Francisco, I thought they might go this route. Alas, their proposal turned out to be a little more conventional. But from a little blurb in Macworld magazine, I learned of the FON Wi-Fi service, which is building a Wi-Fi network based on this crazy, potentially revolutionary approach.

FONThe idea is fairly simple. Many people, especially in dense urban settings, have broadband connections to the Internet, which are not fully utilized. If you were able to attach a smart wireless access point to each of these connections, you could provide coverage for your service, without investing in a lot of infrastructure. The wired part is already in people’s houses, and represents the majority of the physical infrastructure required; all you need to do is get lots of people to buy and install your smart box. You do this two ways: discount the box, and offer people an incentive to keep them running.

FON’s service is basically just this simple. There are two ways to get a FON box installed in your house. First, you can download software for your existing Wi-Fi router (Linksys and Buffalo products, mostly), and convert it to a FON box, at zero cost to everyone. Second, you can order a cheap Wi-Fi box from FON with the software pre-installed. Just unpack and plug it in.

The incentives to run a FON box are equally simple. First, if you opt to make your box open to other FON members for no compensation to yourself, you get free Wi-Fi access across the entire FON network. Anywhere you can find a FON Wi-Fi signal, you can connect to the Internet, for free. There are more than 80,000 “FONeros” worldwide, so this is a pretty strong offering already.

Alternatively, you can be compensated when people use your FON box to connect. (A day pass costs $3 to non-FONeros.) You split the revenue generated by your FON box 50/50 with FON. If you’re in a good location, that could add up to a nice chunk of change, certainly more than the FON box cost to acquire and run. If you run a coffee shop, or live next to a coffee shop, it seems like a no-brainer. Especially if you already have Internet access.

The secret sauce that makes this service work is the software inside the FON box, and the central authorization and billing service they connect back to. (The magic, and potentially huge profits, comes from Metcalfe’s Law.) It’s too early to say if FON will be a resounding success, but I’ve certainly ordered my FON box.

Two other interesting points. First, like Google in the Cringely article, FON is planning to make their own boxes. The first will just be a simpler, cheaper version of the Linksys box most people are using today, but the second will include an integrated Skype phone handset. If that doesn’t make your head spin…

Second, FON’s investors include Google. Imagine that.

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