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FON Raises $22 Million

We live in interesting times.  FON has just raised $22 million from Index, Sequoia, Skype and Google.  FON is trying to create a ubiquitous global shared WiFi network, by encouraging broadband subscribers to share their connections with others.

They have two models:

  • Be a "Linus" and share your connection freely with others.  Other Linus’ can also use your connection for free.
  • Be a "Bill" and charge for your connection.  You must then pay to use others connections when you use them.  But, you pay substantially less than the $6/hour that the big hotspot providers charge today.

Many have pointed out that ISP agreements prohibit you (the user) from doing this.  Sharing broadband is already widespread, though, and the agreements are typically not enforced.  More importantly, though, FON wants to share the revenue they earn with the ISP.  They’ve already signed up Speakeasy and Glocalnet.  And, to my mind, there doesn’t seem to be any reason for the ISP not to like this.  If they can boost revenues from my broadband connection by 10% in a month by working with FON, this goes straight to the bottom line.

This is a pure long-tail play.  By empowering individuals to resell their bandwidth, FON is going to allow the users to make a few bucks each month.  But FON, by aggregating the dollars, will make a substantial amount of money.  If they are successful, they will be the "Google Adsense" of WiFi. There will be plenty of revenue to share with the network operator.

Neat.  Someone obviously thought long and hard about the business model.  I wish them luck!

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