Wi-Fi Crusader in $5 Router Giveaway

By Eric Auchard
FON, a Spanish start-up on an ambitious crusade to turn home Wi-Fi
connections into wireless "hotspots" for nearby users, is set to
unveil on Monday a plan to hand out 1 million wireless routers for
just $5 apiece.
FON, which aims to create a network of home users and small businesses
to resell wireless access to passersby, said on Sunday it will
subsidize $60 Cisco Linksys or Buffalo routers for $5 in the United
States or 5 euros in Europe.
Routers are small boxes users connect to cable or telephone Internet
connections to broadcast wireless signals to nearby devices, inside a
home, business or surrounding neighborhood.
Juergen Urbanski, North American general manager, said FON, which in
February raised $21.7 million from backers including the founders of
Google and Skype, is looking to turn the brand-name equipment into
what it calls "social routers."
The goal of the Madrid-based company is to build block-by-block
networks of shared wireless connections around the globe, turning
local Wi-Fi users into an army of "foneros" -- its term for people who
share wireless access.
As the company's name implies, FON aims to provide wireless Internet
access not just to computer users but also for mobile phones and the
latest portable gaming devices as they roam.
"(Wi-Fi) coverage is universal in big cites, but access is not,"
Urbanski said of how many of the wireless Internet links broadcasting
from businesses, homes, hotels and cafes remain private and
unavailable, even to users ready to pay for them.
Urbanski, a former director of marketing at data storage maker Network
Appliance Inc., said FON is aiming to have 50,000 working hotspots
worldwide by September, 150,000 by year-end and 1 million hotspots by
the end of 2007.
So far, 54,000 people globally have signed up to become "foneros," up
from 3,000 in February, according to the company. The $5 router
giveaway is designed to overcome obstacles to helping consumers
quickly set up hotspots using FON software.
In exchange for receiving a $5 box, users must agree to share their
wireless connections with other FON users for 12 months, the company
said. Shipping and taxes are extra.
"We are changing the economics of Wi-Fi," Urbanski said during an
appearance on a wireless innovation panel at the Supernova conference
on Friday in San Francisco. "We are just piggy-backing on the back of
existing Wi-Fi connections."
But FON could face legal battles with telephone and cable TV carriers
who bar users from sharing Web access they supply, similar to how
Hollywood sued and put the original Napster out of business for
enabling millions to illegally share music.
Urbanski said FON is seeking to win over carriers who lease the
underlying Internet connections by arguing its strategy can expand the
market for Wi-Fi by giving customers a way to roam away from home,
making them more loyal subscribers at home.
"The reality is that we are all talking with .... many of the large
ISPs in the United States," Urbanski said of efforts by the company to
head off a confrontation with the carriers.
FON also is set to release later this week a previously announced
billing system that is key to its multistage plan to transform the
appeal of free wireless access into a sustainable business that pays
parties for their contributions.
Users who grant access to their Wi-Fi connections at home would be
free to roam on other FON networks. Users who decline to share their
home Internet access can pay $3 a day to share a wireless connection
with other FON users.
Copyright 2006 Reuters Limited.
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