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Tue, Apr 24, 2007 - Page 10 News List

Fon to announce tie-up

BIG BREAKTHROUGH Fon has about 60,000 users in the US but ISPs resisted the model, with most license agreements prohibiting the sharing of the connection


In a big win for a little Wi-Fi startup called Fon, Time Warner Cable Inc will let its home broadband customers turn their connections into public wireless hotspots, a practice shunned by most US Internet service providers.

For Fon, which has forged similar agreements with ISPs across Europe, the deal will boost its credibility with US consumers. For Time Warner Cable, which has 6.6 million broadband subscribers, the move could help protect the company from an exodus as free or cheap municipal wireless becomes more readily available.

Fon was founded in Spain in 1995 on the premise that people should not have to pay twice -- once at home, then again in a coffee shop -- for Internet access. At first, the company offered software that let members, called "Foneros," turn Wi-Fi routers into shared access points, but it took hours to get up and running.

In the fall of last year, Fon, which counts Google Inc and eBay Inc's Skype among its investors, started selling and sometimes giving away its own branded wireless router, called La Fonera. Since then, it has distributed about 370,000 of them worldwide.

La Fonera splits a Wi-Fi connection in two: an encrypted channel for the Fonero and a public one for neighbors or passers-by. Foneros can decide how much of their bandwidth to share with the public and can log on to any Fon router without charge. "Aliens," as Fon calls nonmembers, can register on a Web page and pay a modest US$2 or US$3 for 24 hours of access.

In the US, where it costs US$10 for a day pass to use a T-Mobile HotSpot at a Starbucks, Fon's economics seem particularly appealing.

Joanna Rees, chief executive of Fon USA, said such rates at coffee shops, airports and hotels might work for a business person with an expense account but are too high for people who just want to quickly check e-mail, make a call on a Wi-Fi phone or play on a wireless video game device.

"They're extorting people," Rees said.

Starbucks Corp and T-Mobile USA Inc representatives responded that they provide a premium service, and that customers see value in paying for speed, security and reliability.

Fon has about 60,000 Foneros in the US. In February, the company launched "Fonbucks," a one-month router giveaway aimed at people who live above or next-door to a Starbucks. It was an amusing way to get more La Foneras into high-density areas, and it worked to the tune of 6,800 free routers.

But until now, ISPs in the US have resisted the Fon model. Most big companies' end-user license agreements prohibit subscribers from sharing their connection outside the home or business. Verizon Communications Inc, for example, can terminate contracts if it finds an ad hoc hotspot.

Those policies are antiquated and don't mesh with the reality of untold thousands of people using their neighbors' unsecured Wi-Fi connections, Rees argues.

"It's a dirty secret how much leeching" goes on, Rees said. She said ISPs should embrace Fon because the routers, which require that "aliens" enter a valid credit card number before getting online, put a sharp stop to the leeching. And getting free access to the worldwide network of La Fonera routers encourages people to get or keep a broadband connection at home.

In the Time Warner deal that was expected to be announced yesterday, Fon and the cable company would split what "aliens" pay to use the hotspots.

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