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.