Wi-Fi sharing company wins Skype, Google as backers

Eric Auchard

SAN FRANCISCO: A wireless communications start-up in Spain that is partly a grass-roots social movement seeking to encourage users to share Internet access with their neighbors is set to announce on Monday $21.7 million in funding from big name backers, such as Skype Technologies and Google.

Fon Technology SL said it has secured 18 million euros in initial financing from Skype, the popular Web-based calling company now owned by eBay Inc., Google Inc., and venture capital firms Index Ventures and Sequoia Capital.

These backers offer legitimacy for Madrid-based Fon, whose goal is to create a block-by-block network of shared wireless links around the globe, by turning users of local Wi-Fi access into an army of "foneros," or people sharing wireless access.

Fon is a wireless incarnation of peer-to-peer technology that was first made popular -- and controversial -- by the pioneering online music-sharing service, Napster.

As the company's name implies, Fon would allow users of not just laptops, but also mobile phones or the latest portable gaming devices -- anything with a built-in Wi-Fi link -- to share wireless connections offered by other Fon users.

But Fon could face legal challenges from phone and cable TV carriers who bar users from sharing Web access, just as Hollywood sued and put the original Napster out of business for encouraging millions to illegally share music.

"It's an awesome idea just like Napster was, with all the consequences that come with it," said Roger Entner, a wireless industry analyst with market research firm Ovum in Boston.

SOCIAL MOVEMENT, OR MONEY-MAKER?

The company's multilingual Web site is a mix of social activist iconography and money-making e-commerce self-service. Clicking the link "Join the Movement!" takes one to a subscriber sign-up page, for example.

Fon is the brainchild of Argentinian entrepreneur Martin Varsavsky, founder of major Spanish telecommunications and Internet companies Jazztel Plc and Ya.com.

Fon's founder said his strategy is to bargain with Internet Service Providers (ISPs) and vastly increase their audience.

"My heart is with people who invest in networks," Varsavsky told Reuters in an interview late last week. "We befriend the ISPs by sharing revenue," he said.

Toward that end, Fon has signed up GlocoNet, the second largest ISP in Sweden, and U.S.-based Speakeasy of Seattle.

Varsavsky said he also holds out hope of convincing potential adversaries among established ISPs such as Telefonica, Deutsche Telekom AG, AT&T Inc. and Time Warner Inc. of working with his "foneros."

Internet subscribers who install Fon software to make their wireless routers able to share bandwidth with other Fon users are then allowed to freely roam the Fon network around town or worldwide and find wireless connections as they go.

Fon only needs two to four participants, or foneros, per city block to give good wireless coverage, Varsavsky maintains.

If a user is part of Fon, they receive wireless access as they roam for free. Non-Fon members pay for Wi-Fi service, which Fon plans to split with local Internet access providers.

"You first have to become a customer of an ISP... Then you can become a 'fonero' if you donate Wi-Fi," Varsavsky said. "If you don't donate, you are not a 'fonero.'"

Wi-Fi was first popularized by grass-roots technology advocates in high-tech centers around the world, who sought to create shared neighborhood networks. It is this grass-roots spirit that Fon seeks to tap.

"That's a great idea, but you are breaking the law," Ovum's Entner said flatly. "It is treating Wi-Fi as communal property when it is not."

While sharing Wi-Fi connections remains commonplace among consumers, the situation exists because ISPs have, by and large, been reluctant to enforce their user agreements banning this.