fontastic.org - FON and free WiFi blog » 2006

Linksys router only $19 on FON.com May 30, 2006

FON.com offers the Linksys router WRT54GL for only $19 until June 1st, 2006. This offer is also available in Europe at a price of €19. The router comes with the FON firmware flashed and is therefore ready to go. Shipping and tax is not included.

FON WiFi prices update May 28, 2006

Martin Varsavsky posted an update on his personal blog and it appears the couple of hours the Alien pricing page was online earlier this month was just a faux pas, fortunately. Anyways, here are the preliminary *official* prices:

3 EUR/ USD per 24 hrs for any single day purchase
2 EUR/ USD per 24 hrs with a purchase of 5 days minimum (valid one year)

This is truely revolutionary and will most likely initiate a huge price drop throughout the WiFi market.

FON: the future of the business model May 25, 2006

The FON movement has converted 39.000 people into foneros so far. One day, it might be as much as 1 million forming a real ubiquitous WiFi network. Linuses and Aliens will be able to roam in larger cities and at points of interest worldwide. We foneros appreciate such a scenario very much but let's not forget that Fon is not only a movement, it's a business, too. Now, let's do the maths and see where the business model could be in:

1. Hardware

Today the only hardware business lies in the sales of the Linksys router which clearly is not making any money, in fact Martin Varsavsky claims FON looses $25 per unit. With their own router (coming shortly) they will probably make a margin which I assume should be at least around 20% of sales in the long run (direct to consumer model and learning curve effect provided). Let's simplify and only note down the best case scenario: 1.000.000 x $25 x 20% = $5.000.000 gross margin. Good, but not good enough I guess given the VC put into FON (+ $20 Mil).

2. Basic Service

The most obvious source of income is the revenues generated thru Aliens. As it is pretty easy to avoid monthly charges for heavy users by simply purchasing a router (less than 1 month of service) and become a Linus, the Aliens model is only interesting for those who do not have broadband at home and travel a lot. T-Mobile has had 450.000 log-ins per quarter with 4.500 hotspots. That's 400 log-ins per hotspot and year but obviously these hotspot are only located at places with enough traffic. However, in a scenario of 1 Million hotspots one could assume there are at least 5% that can attract enough Aliens to generate revenues. I know, this is going to be a Web 1.0 business plan calculation but let's play: 1.000.000 x 5% = 50.000 hotspots. We said, there are Linuses and Aliens using the hotspot i.e. not everyone is paying. Let's say there are 25% Aliens using these high-traffic hotspots (in total there might be fewer aliens of course). Then: 50.000 hsp x 400 log-ins = 20 Mill. x 25% x $2 (min. charge) = $10.000.000 gross margin. Not bad as this is per year.

3. Value Added Services

Once you built a network like this and everyone is online wirelessly anytime and anyplace, demands for services even increases. Because all foneros log-on via a hotspot everyone will need to pass the log-in portal which is thus an ideal marketplace for added value services. Cheap Voice-over-IP calls could be another source of income and actually also be convenient for foneros if offered thru FON as they don't need to sign-up to another service. A French WiFi company in Marseilles is doing exactly this and charges €5 per month for unlimited calls. To calculate the revenues from value added services is really getting difficult but just for fun, let's assume this: only 1% are using value added services at, say $5 per month and you have 100.000 x $5 x 12 months = $6.000.000 per year.

The key of success is of course, to create a really large user base. This is true for almost every Web 2.0 company but is even more important in this case as the attraction and the beauty of FON lies in the ubiquitous network. In other words, a sporadic accumulation of access points won't work on the long run, a close meshed network, however, will be both a great user experience for many and a great success for FON.

DISCLAIMER: the above calculation is fictitious and describes a scenario I would call "best case".

Linksys recently announced two new WiFi phones, the WIP300 and WIP330. Latter should finally work on the FON network as it features hotspot authentication (i.e. a browser that allows you to enter user name and password). In other words, with the WIP330 you can talk all day for free to parties within the same SIP network (e.g. Stanaphone or Gizmodo) or cheaply worldwide. The features of the Linksys WIP330 comprise:

Support SIP v2 Standards
IEEE 802.11b/g Wireless Standard
Microsoft Windows CE & IE Web browser
Support QoS (Quality of Service)
50 hours standby time, 3 hours talk time
Fast Hotspot Authentication

According to eHomeUpgrade the WIP330 is available now for around $369.99. We checked a couple of etailers and ThinkBright seems to have it on stock for $305.50.

The final design of the new FON router seems to be here. Martin Varsavsky posted it on his website stating the router would enable users to utilize social features. Given the technology the router software is based on (DD-WRT firmware, Chilisoft enabled) we might see all kind of local/ global portals where Foneros can meet and socialize.

We think contribution of as many people as possible is always great to move a driving idea forward. This is why we offer free blogging for all Foneros. You'll get a free WordPress 2.0 blog, a choice of templates and a catchy URL you can pick. There are no strings attached at all, so give it a try.

Free WiFi in New York City parks May 16, 2006

This summer many New Yorkers will get out more often thanks to free WiFi rolled out over next few months. Central Park will be WiFi-ready be July if the contractor can meet the deadline. Other major parks will follow shortly: Prospect Park in Brooklyn, Van Cortlandt Park in the Bronx and Flushing Meadows-Corona Park in Queens, to name the big ones. Read the full NY Times article here.

Skype announced free calls to all US landline and cell phones until the end of the year, valid for calls made within the US (doesn't matter where the account has been set up). You have to have a free Skype account but otherwise there are no strings attached (no credit card required, no Skype-out "purchase" required).

FON announces WiFi prices for Aliens May 14, 2006

Now it is official: (guest) users of the FON WiFi network who do not participate in the mutual exchange of broadband (so called Aliens) will be charged

5 Euros ($6.46) for 24 hrs of access or
40 Euros ($51.66) per month

Earlier posts on various blogs suggested a price of 2 EUR/ USD per day. We assume pricing for the US will be at a 1:1 exchange rate and therefore cheaper than according to the current exchange rate.

Update: Steve, "official" guest blogger at FON, informed us that the page we got the info from ("http://en.fon.com/info/aliens.php") was old and not valid. The link has been taken off for now.

New FON router firmware features May 9, 2006

Just checked the French FON blog and there are some great news of upcoming features to be included in the next FON router firmware updates:

personalize your AP (access point): SSID, geo-location, local users (some of the features already implemented in FONadvanced firmware)
NEW: user statistics allows you to view who was online and when, plus check the bandwidth used per guest (probably Bill integration here when available)
NEW: you can personalize the homepage/ default login page (your own welcome message/ photos) and allow guests to access 2 websites free of charge

That's really great news. Hope this will all be integrated in both versions of the software. Our FONtastic router runs on FONadvanced, of course, and we would love to customize our AP homepage. We have another idea: why not provide a couple of FON related links to sites/ features that foneros can show on their homepage. We would throw in free blogs for everyone, just a reminder

FON Germany posted a first study of the new FON router today. It looks like the new router will rather be reduced in terms of interfaces/ connections (i.e. no 4 x Ethernet router included as in most routers today) but on the other hand be more appealing design-wise (as compared to the Linksys WRT54). However, it is only one study and the mock-up doesn't show the third side of the device. Leaves plenty of room for further speculation.

AOL is FON friendly - at least in Germany May 5, 2006

According to SÜDDEUTSCHE ZEITUNG (one of the major newspapers in Germany), AOL has no intend to hinder Foneros from sharing their bandwidth in Germany. „Our customers may share their accounts with other users at their will“, says AOL-spokesperson Tobias Riepe.

Source: http://www.sueddeutsche.de/,cm2/computer/artikel/79/75004/ via fonblog.de

Cost of Connection: Internet cafés worldwide vs. FON

In it's recent issue, Wired magazine presents an interesting comparison of internet café prices worldwide. It's broken down by hourly prices and in % of GDP per capita per day. Now, FON will shortly offer 24h access for just $2 which is only 8.3 c per hour. This means, in New York City you could stay connected for one fourth of the average cost of an internet café in Lima. Here is a short overview:

High: New York City ($12.80/ 11.2%)
Low: Lima, La Paz ($0.38/ 2.3% - 5.1%)
European Cities: Paris ($4.86), London ($1.78), Prague ($3.31)
East Asia: Shanghai ($0.62), Tokyo ($3.41)
Highest GDP: Kinshasa, D.R. of the Congo ($1.59/ 68.4%)
Lowest GDP: Bangkok ($0.39/ 1.7%)
FON (worldwide): ($0.08)