IP Democracy: Google, Skype Back Fon in $21.7 Mil. Round

Wi-Fi sharing start-up FON got a big, really big, boost today from an A-team of investors, raising $21.7 mil. (18 mil. Euros) from Google, Skype and Sequioua Capital in a funding raising round.

Founded by Argentinian entrepreneur Martin Varsavsky, FON, located in Spain, was formed as little more than a concept three months ago and is premised on the idea of community-shared Wi-Fi. “Foneros,” as users of the service are called, download software to their Wi-Fi routers and then share capacity with fellow Foneros, permitting Wi-Fi connectivity to FON members when they are in range of a Foneros Wi-Fi router.

Right now all FON members are “Linus” members (named after Linus Torvalds who created the open source software Linux) and connect to Wi-Fi hotspots of other members at no charge. But, FON wants to start working with ISPs, who typically bar this kind of sharing — although it’s hard for the ISPs to do anything about it.

FON wants to offer a “Bill” service (named after Microsoft Chairman Bill Gates) that allows Bill members to charge a fee for Wi-Fi access and then redistributes the collected fees to affected ISPs. Speakeasy in the U.S. and Glocalnet in Europe have signed up to share in this kind of revenue generation.

Varsavsky spells out more details in his blog item today, including the claim that FON now has over 3,000 members, and that the company hopes to have a million hotspots within four years, far more ambitious than any other Wi-Fi network company.

I must say I’m not 100% clear how all this FON-stuff will work or if the company can ever make money. I’m not alone in this puzzled reaction. Om Malik has a long quote from Wi-Fi expert Glenn Fleishman, which concludes

I’m still pretty dubious about the notion of every home being a hotspot because that requires incredible luck and coordination to get continuous zones of coverage, and outdoor coverage really requires antennas — not just an access point in the window.

But, three pretty smart investors seem to think FON has a chance, so I’m reserving judgment until more specifics of FON’s business plan emerge.

Posted by Cynthia Brumfield on February 5, 2006 8:30 PM to IP Democracy