Google, Skype Back WiFi Startup
FEBRUARY 06, 2006
Google (Nasdaq: GOOG - message board) and eBay Inc. (Nasdaq: EBAY -
message board) division Skype have
invested in the Spanish start-up company FON , whose software turns home
wireless routers into WiFi
hotspots for broadband sharing among a worldwide community of "foneros."
Google and Skype joined VCs Index Ventures and Sequoia Capital in a $21.
7 million round led by Index,
according to a statement released Sunday. The individual funding
contributions of the investors were not
disclosed. (See FON Raises $21.7M.)
The startup was created just three months ago by Internet entrepreneur
Martin Varvarsy, who floated the
idea in a blog, the company says. Varvarsy came to the Valley in
November and December to enlist
backers, and his pitch apparently rang true with some impressive
figures.
Cisco Systems Inc. (Nasdaq: CSCO - message board) didn't invest, but its
routing group VP Mike Volpi
took a spot on FON's board of directors along with Skype founders Niklas
Zennstrom and Janus Friis and
Danny Rimer of Index Ventures.
FON’s goal is to create a global network of shared WiFi connections. To
join the network, a broadband
customer signs up on the FON Website, then downloads some software onto
his wireless router that turns
the router into a wireless hotspot. He is now a member of the FON
community -- a “fonero.” He then
places his router near a window so that other foneros roaming around can
pick up the signal.
The WiFi sharers can choose either to charge and be charged for shared
WiFi usage with other members, or
to participate on a share-and-share-alike (free) basis. They can also
stipulate how much total bandwidth
is shared, and set security levels to ensure that local PC assets can't
be touched from outside.
Google and Skype have their own reasons for getting behind FON's
"wireless broadband everywhere"
concept. (See Google's Ad-Mad Network and LR Poll: Net 'Squatters'
Should Pay.)
Skype is facing a barrier to mainstream use because its VOIP service is
still very much tied to the PC,
where the broadband connection is. Skype is WiFi-ready, and might become
more popular if wireless
broadband was more available. (See D-Link Makes Skype Adapter, Retail
Skype Debuts at RadioShack, and
Linksys Makes Skype Phone.)
“There is no more important shared goal that we have as an industry than
helping to make broadband
Internet access widespread and low cost,” wrote Skype founder Janus
Friis in the company’s blog Sunday.
“So as part of Skype’s role in making this happen ... today we are
announcing that we are making a small
investment in a new and exciting company called FON.”
Skype announced at the Consumer Electronics Show a partnership with home
router maker Netgear Inc.
(Nasdaq: NTGR - message board) that allows Skype users to place VOIP
calls using a WiFi handset.
Google has installed a WiFi network in Mountain View, California, and
has entered a proposal to build a
larger one in San Francisco. (See SF Muni WiFi in Low Gear.) Analysts
say a key logistical problem in
such projects is the placement of enough wireless access points to
achieve seamless coverage. By
enlisting wireless routers in the home, FON may provide part of the
answer. (See Google's Own Private
Internet.)
Google representatives were not immediately available for comment.
FON plans to make its profit by charging a fee from members called
“Aliens” who use other members'
wireless hotspots but don't share their own. FON says it will share 50
percent of those usage fees with
ISPs, who might naturally feel a little left out.
Broadband service providers such as cable MSOs, telephone companies, and
independent ISPs may lose
revenue from new broadband service sales if broadband sharing
communities like FON prove successful.
Some broadband providers already expressly prohibit users from sharing
the service outside the home.
FON says it hopes to create a large community of users worldwide -– a
million shared hotspots by 2010 --
so that wherever its members roam, wireless Internet access is
available. For sparsely populated areas,
FON says it plans to install hotspots itself. FON says it has picked up
3,000 members since beginning
its beta last November.
“As Foneros continue to join, and there are more and more Fonero
hotspots, the dream of a unified global
broadband wireless signal becomes a reality,” wrote FON's Varvarsy in
his blog Sunday. “The FON
movement, as we call it, can achieve what 3G or EVDO has not -- a truly
broadband wireless Internet
everywhere.” (See Resistance Is Futile.)
— Mark Sullivan, Reporter, Light Reading
