FON Raises $9.5 Million: No More Free Hardware?
Written on April 12, 2008 – 4:19 pm
Boris Veldhuijzen van Zanten,
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Fon founder Martin Varsavsky with a Fon router.
Fon, the free hotspot provider that gives away free Wi-Fi routers and wants to build a worldwide, and free, Wi-Fi network has announced closing a new investment round. They raised $9.5 Million from a bunch of investors. The current shareholders (Google, British Telecom, Digital Garage and Martin Varsavsky) invested some but there is also a new investor involved: the US Venture Capital arm of Sistema, Russia´s leading telco. This also means that FON will start expanding into Russia.
Another exciting new plan is the development of a sort of personal proxy server built into a Fon Hotspot. It will up- and download content from the internet for you while you are doing other stuff. It will be called Fonera 2.0 and we can’t wait to get one for free.
And that might take longer than expected because Martin has announced that he is going to be a little more cautious with his money. No more free hardware and slightly higher fees will help Fon decrease their burn-rate from 1.2 million a month to $500.000 a month. There are also plans to upgrade to the updated WI-Fi protocol lovingly called ‘802.11n’.
There is no mention of Index Ventures and Sequoia Capital who invested in earlier rounds. These earlier rounds also brought in a lot more money so it is likely that Fon is less successful than they try to appear. It is very hard to find out how many active Foneros are currently active and estimations range from 125.000 to 1 million+. Fon is not very transparent when it comes to showing the number of routers which are really active. If you have set-up a Fon hotspot in the past you must enter a request to have it removed from their maps. If you don’t they still count you in their media and investor statistics, as a live Fon Hotspot. Of the Fon Hotspots that are actually live only a small percentage will be a an actual hotspot where people accidently stumble upon it.
As a former Wi-Fi Hotspot operator (sold my business in 2003) I’m not very optimistic about Fon’s future. The dream of having free and ubiquitous Wi-Fi everywhere is extremely alluring and it is clear and understandable that Fon has a large community of eager believers.
Fon makes for a great story but is that enough to build a business on.
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8 Responses to “FON Raises $9.5 Million: No More Free Hardware?”
By Bob Boynton on Apr 12, 2008 | Reply
It’s the ‘tipping point’ problem. Their map says there are several fon wifi routers in the town in which I live, but they are not close to anywhere I go. I am going to get the next router, however. I assume it will be as good a xxxN router as I can purchase at Best Buy.
Fon has a gui for gmail that handles uploading files to and organizing them on your gmail account that is very handy. It is a browser extension for firefox. Folders makes using gmail for file storage a more reasonable possibility.
By Sander van der Vliet on Apr 13, 2008 | Reply
@alexandernl (http://twitter.com/AlexanderNL/statuses/785826927) has a FON router at Noordermarkt in Amsterdam and he earned € 9,- with it in a week. I guess it will pay-off his monthly broadband fee easily. On strategic spots the FON router might actually make money.
By Boris Veldhuijzen van Zanten on Apr 13, 2008 | Reply
@sander: I’m sure there are people who can make money. But that will be a very small group. Wi-Fi access points generally have a range of 20 meters so unless you live above a bar or hotel the chances of anyone accidently stumbling upon your access point are slim.
In Russia they might have a more interesting market. Lots of people live packed together in apartment buildings and might not have enough money to get their own DSL line. But if one of them (in the middle) gets a line than he can use a FON router to resell access to everyone else in the building.
So I have more faith in the shared line strategy than the open Hotspot market.
By Gleb Kaplun on Apr 14, 2008 | Reply
Wrote related article in russian
http://blog.web2people.net/blo.....nding.html
I’m a little surprised by Sistemas steps in funding European startups. Can’t get FON’s monetizing model and not sure they could cover world with their hotspots. Will see…
By reader on Apr 15, 2008 | Reply
it has been widely published, that the actual numbers of active fonspots are more than 170.000 on a global basis. it is also true, that you may select the active fonspots in the fonmaps. so this article is mostly bashing FON. don´t ask why…
By Boris Veldhuijzen van Zanten on Apr 15, 2008 | Reply
Hello ‘reader’. I played with the maps a bit and it is true that you can select active points but you can’t search for all active points and get a total. So there is no way to find out what the real (not just the ‘widely published’) number is.
I’m not bashing Fon at all but simply asking serious and critical questions. If you know more please tell us all about it! Always keep asking why!
By steven on Apr 16, 2008 | Reply
* Counted “187.635″ fonspots last sunday…
one could download all poi’s inside excel & count ‘m
* maps.francofon.fr will soon be restored so it can do an “active” count as well!
* I haven’t seen anything about a “proxy” on the fonera 2.0 but the usb port will provide access to usb harddisks; mostly for torrents, flickr, youtube… things that hopefully keep foneros to turn off their device if not at home…
* You haven’t yet spoken about the FonoSfere program? :-)
People in the big cities have more luck getting aliens …
FON has also adverted in the past to the people living near a “pub”, “school”,”hotel”, …
The 20meters can be improved by using the fontenna which was sold at 2 euro untill recently
I know someone in Amsterdam who has used 3 foneras/fontennas and covers a few city blocks…and if no train passes… you can even use his wifi from the trainstation with a normal wifi laptop…
By Boris Veldhuijzen van Zanten on Apr 16, 2008 | Reply
Hi Steven, thanks for the numbers! So that 187.635 would be the total number of Fon access points sent out to people, switched on at one point or the actual live hotspots right now?