Google and Skype fund FON

Google and Skype (together with two Californian capital investers) invested over $21 million in FON. FON is a community of people who share WiFi. Users of the FON “network” should choose one of three user profiles, either Linus or Bill or Alien. A Linus is a user who shares his/her WiFi in exchange for free access throughout the community wherever there is coverage. Instead of roaming for free, Bills are users who prefer to keep a percentage of the fees that FON charges to Aliens. And Aliens are those guys who pay to connect. FON will get some of that revenue, and share it with ISPs.

That’s not content sharing P2P, it’s physical connection sharing P2P in an attempt to close the access to the network in continuous coverage. An interesting and crazy idea, which has questionable viability according to many. Techdirt places three question marks next to FON’s solution and business model.

First, and most importantly, nearly every ISP out there forbids you from sharing the connection. While the company claims it will convince ISPs that offering this service makes them more desirable, it seems unlikely that too many will buy into it.

It’s also worth noting that very few people actually have WiFi in what might be considered desirable locations.

Also, if this plan actually catches on (which still seems unlikely), there will be an adverse selection problem. It’s become quite clear by now that there’s a very small percentage of people who will pay for WiFi, and only when there are no real alternatives. On top of that, anyone who seriously would use this service often enough to matter would obviously choose to be on the Linus plan — thereby destroying what little business model this offering already had.

Bruce Stewart also points out that the idea of having to flash wireless AP/routers with FON’s software might not appeal to many users. Nevertheless, although they support only Linksys WRT54G/GS/GL versions 1x to 4x AP/routers for the moment, I like this idea better than being forced to use FON’s customized hardware. I don’t think that would fly.

Then of course, today’s limited WiFi coverage makes the idea of combining these small cells together in a significant FON coverage rather unlikely.