FON: Interesting service! Lots of venture capital! And a ‘social’ business model?

FON (en.fon.com ) attempts to create a global WIFI community by providing a semi-open-access service that allows each participant to turn their WLAN router into a hotspot. They have three role-models (user scenarios): A Linus (Torval)  is someone who owns a FON enabled router and allows all other FON participants to use his/her connection for free and subsequently uses all FON spots for free. An Alien is someone who does not run a FON hotspot and thus has to pay between 2 and 3 euro per hour of using FON spot. A Bill (Gates) wants to make make money and recieves 50% of the money aliens spend for surfing on his connection.

Basically this creates a two tire network where a Linus has the benefit of surfing for free in many locations (while FON is making money from his hotspot), and Bill’s (and FON) making money from Aliens.

I have to admit that I feel a certain fascination for the versatility and unpredictability of ‘social aspect’ of the business model. It surely offers different benefits for various use-scenarios. I can imagine how some (especially cafes and similar) can take advantage of the possibility of making money by becoming a Bill. I also see how someone who lives in the middle of nowhere becomes a Linus and suddenly can connect around the world for free. However you see where i am leading, there are semi-free-riding problems embedded in the model. The distribution of user types will most likely determine the profitability of the system. And if I may add, I believe it is a very interesting indicator of (our current state of) our society(s) whether people are willing to share or greedy for money.

One important point that is worth mentioning is that FON managed to receive 12 Million US$ venture capital from Skype and Goolge. With this money they are subsidizing FON enabled routers (which they sell for 5€ a piece). Thus right now they are losing half a million dollar every month. Their theoretic calculation is that they are making 1 € per month per hotspot hence they will reach the break even point once they have about half a million hotspots. For now they have around 5000.

For me this calculation reminds me of the web 1.0 heydays but no matter what it will be interesting to follow FON’s evolution.

The Spiegel has an interesting interview with FON leader Martin Varsavsky @ http://www.spiegel.de/netzwelt/netzkultur/0,1518,434591,00.html

(Please feel free to ask me for a copy of the article as it will only be available until 11.9.2006)

And for everybody interested in becoming part of the community look at the GoogleMap indicating existing FONspots @ http://maps.fon.com/

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