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The Back Page: $5 WiFi Routers...With a Catch

by - June 27th, 2006

Spanish company Fon is offering the world WiFi routers for only US$5, but there's a small catch: Users have to agree to install Fon's software onto their routers, and that software opens up their WiFi access into a public hotspot accessible by anyone...for a fee. In other words, Fon wants to use your ISP service to build their own secondhander network, and they'll cut everyone but the companies actually supplying the bandwidth in on the action.

Fon's business model is predicated on three kinds of users: "Linuses" are users who run a Fon hotspot in exchange for accessing every other Fon hotspot in the world for free; "Bills" are users who install a Fon hotspot in exchange for 50% of the revenue generated from their hotspot from the third type of user, Aliens; "Aliens" are those accessing a Fon hotspot from outside the Fon network of hotspot providers for a fee.

At issue is the idea that Fon intends to derive a profit from a service they are ultimately not providing. Most ISP customers are paying a fee for bandwidth predicated on the usage of one home. Many ISP customers share their connections with their neighbors for free -- which is technically a violation of most ISP Terms of Service (TOS) agreed to by customers in the U.S. -- but Fon's business model wants to take that idea, link it together with others violating their contracts, and then make a profit on it.

The profits of big-business ISPs is not the real danger presented by such a business model, however; that real danger is the fact that bandwidth doesn't grow on a bandwidth tree for free. Bandwidth is provided by ISPs that put real wires in the ground, real networking gear in real places (with real rent and real mortgage), and real people running that real networking gear.

Were Fon's vision carried to its ultimate conclusion, who would be paying for that bandwidth? The answer is no one, and even on a small scale, such thievery can only mean bandwidth not being paid for.

Of course, the bandwidth will ultimately have to be paid for, or it will not exist. That means that those of us not participating in Fon's network of thievery will end up seeing our own rates go up, or our quality of service go down. Network bandwidth can not evade the zero sum reality of the market place.

Now I say all this with full understanding that there are millions of people around the world who think that they shouldn't have to pay for music, movies, software, or anything else that can be rendered into digital bits. Those people think that such products will and should be provided to them for free, and that they will continue to be produced even if everyone else is stealing, too.

Such philosophies don't hold up to even a second of logical probing, but those with such mindsets are most likely not concerned with such trivialities as logic in the logic in the first place.

Accordingly, Fon will likely find the hundred thousand or so secondhanders it wants with this first wave of subsidized routers, and with backers like Skype, Google, and Sequoia Capital, it will likely have the means to reach them. Then the money will be rolling in to everyone but the people actually doing the work.

It's funny to think that such big name backers would invest in what amounts to nothing more than a digital pyramid scam.


began using Apple computers in 1983 in a high school BASIC programming class. He started using Macs in 1990 when the Kinko's guy taught him how to use Aldus PageMaker, finally buying a Power Computing Power 100 in 1995. Today, Bryan is the Editor of The Mac Observer, and has contributed to the print versions of MacAddict and MacFormat (UK).

You can send your comments directly to him, or you can also post your comments below.

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Show: Subjects Only | Full Comments
Close Name:George Bailey Posts: 17 Joined: 26 Jun 2006
Subject: Sheesh

Could you be more retarded? Obviously everyone is paying for their own bandwidth. Do you think it comes from fairies? They are just reselling some of the part they don't use.

Close Name:gslusher Posts: 2001 Joined: 13 Nov 2002
Subject: I hope that they have attorneys

I'm not an attorney, but it wouldn't surprise me to see Fon get into legal hot water. It's also likely that the "Linuses" and "Bills" will get into hot water if they don't carefully read their ISP's terms of service and user agreements.

Close Name:gslusher Posts: 2001 Joined: 13 Nov 2002
Subject: Can't sell what you don't own

Quote
George Bailey wrote:
Could you be more retarded? Obviously everyone is paying for their own bandwidth. Do you think it comes from fairies? They are just reselling some of the part they don't use.


That is assuming that the users have the right to sell "unused" bandwidth. Would you be willing to bet your house, your car, your retirement, all your bank accounts and investments, and your income for the next 20 years that you have that right? Do you have a spare $10-25K to pay an attorney to defend you in a lawsuit? If so, go ahead. Otherwise, spend a few hundred bucks to have an attorney go over the legal issues, first.

Close Name:Small White Car Posts: 1937 Joined: 02 Jul 2004
Subject: Right...

Quote
George Bailey wrote:
Could you be more retarded? Obviously everyone is paying for their own bandwidth. Do you think it comes from fairies? They are just reselling some of the part they don't use.


This is like you paying $12 to get into an "all you can eat buffet" and then charging 3 of your friends $3 to get in with you. So you get $9 from your friends and pay $12 to the buffet to get in and then you let the 3 friends in the back door..

Then the restaurant kicks you all out and you stand there and say "But we all paid!"

Do you honestly think the restaurant will let all 4 of you in without any problem? You really think all 4 people paid for their meal in that situation?

Close Name:Terrin Posts: 350 Joined: 29 Jan 2006
Subject:

You know I really would not feel to bad about stealing from a bunch of crooks. The Broadband providers are an evil lot. They are actually lobbying Congress to prevent States and local governments from providing low cost internet for their respective residents. In that case, the Broadband companies are not doing any work, just trying to preserve their revenue streams.

Where I live Comcast is my only choice of provider, and they often prevent me from using services such as Vonage, and I do pay for my service. Comcast does it because it to offers a phone service that is twice as much as Vonages.

Close Name:Brutno Posts: 194 Joined: 28 Aug 2002
Subject: Huh?

Quote
George Bailey wrote:
Could you be more retarded? Obviously everyone is paying for their own bandwidth. Do you think it comes from fairies? They are just reselling some of the part they don't use.


With a screen name of George Bailey you really ought to know better. This is stealing, glorified under technological jargon. The funny thing is that the LInuses stand to lose their service and may face a lawsuit, for virtually nothing in return.

Close Name:geoduck Posts: 1667 Joined: 30 Dec 2003
Subject:

Quote
That means that those of us not participating in Fon's network of thievery will end up seeing our own rates go up, or our quality of service go down.

Of course I'm expecting both of these to happen anyway.

Close Name:Mikuro Posts: 444 Joined: 15 Jun 2002
Subject:

Even as it is, 90% of the bandwidth of most broadband providers is used by less than 10% of their customers. (Note: No, I don't know the exact numbers, but it's something like that.) And yet the heavy users pay the same as the light users.

If this bandwidth sharing becomes a real problem, it's not like ISPs will have no recourse: they'll just change their billing plans to charge the heavy users a bit more. Sucks for heavy users, but it would probably be great for the other 90% of broadband users. Broadband providers are not helpless fawns.

I doubt these hot spots are going to put all that much of a strain on ISPs, though. They'll probably be used mostly for light things — email, web browsing, etc.

I still think Fon's business model is a bit questionable, but I don't see it bringing about armageddon.

Close Name:rezonate Posts: 622 Joined: 04 Feb 2005
Subject:

Quote
George Bailey wrote:
Could you be more retarded? Obviously everyone is paying for their own bandwidth. Do you think it comes from fairies? They are just reselling some of the part they don't use.


Along parallel lines, I definitely don't mind opening up my computer after hours so it can be used in a zombie network. Heck, I paid for the processor cycles but I'm not using them. Might as well let someone else get a benefit while paying me.

Oh wait, zombie networks are bad...

Close Name:horvatic Posts: 99 Joined: 27 Jun 2003
Subject: This is a Scam

I would definately catagorize this as a scam and a rip off to anyone who sets one of these up. First there's the chance you lose your service for violating your contract. Then there's an even bigger chance that this router is rigged with spyware so they know how many hits your getting when people from the outside use it.
I wouldn't go near anything like this. You know what they say? If it's to good to be true most likely it's a rip off.

Close Name:Kent L Posts: 1 Joined: 22 Jul 2006
Subject: Double Sheesh

I see a lot of condescension here mixed with assumptions--never a good mix. Oh and just for kicks without any justification let's insert a little fear in too by mentioning "SPYWARE"---ooooohh scary! Guess I'll never buy anything again, just to be safe.

What FON is doing is allowing everyone with an *appropriately licensed* broadband connection to set up their own internet cafe. I haven't heard anyone (yet) pontificate about the evils of internet cafes re-selling their bandwidth, so why should FON users get that treatment, when they're doing the same thing?

There's no harm done as ISPs cap your bandwidth anyway, so sharing only squeezes that part which the FON user paid for, not anybody else's.

And speaking of ISPs, just what exactly do you think it is that they do but RE-sell unused bandwidth??? It's not stealing when they do it, but woe unto the lowly individual who tries to do the same thing! Then it's unleash the scorn and bad morality plays about all you can eat buffets...

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