Google, Skype Invest in Start-Up to Help Hotspots Charge a Fee
Google Inc. and EBay Inc.’s Skype Technologies Inc. are investing in a Spanish start-up that plans to help hotspot owners charge for Wi-Fi access, a plan that could face significant opposition from Internet service providers.
The Internet heavyweights were joined by venture capital firms Index Ventures and Sequoia Capital in making a $22-million investment in Madrid-based FON. In its announcement Sunday, FON did not say how much each investor was contributing.
FON’s idea, floated just three months ago in a Web posting by founder Martin Varsavsky, is to sign up people who have Wi-Fi hotspots in one of two ways.
“Linus members,” named after Linus Torvalds, who created the Linux software, would share their hotspot with other Linus members for free.
“Bill members,” named after Microsoft Corp. founder Bill Gates, would charge for access to their hotspot. FON would get some of that revenue and share it with Internet service providers.
The network has gained 3,000 Linus members since going live in November. There is no software for Bill members, but Varsavsky expects it to be ready within four months. Linus software is available only for Wi-Fi routers from Linksys, a division of Cisco Systems Inc.
However, most ISPs prohibit subscribers from sharing Internet access with people outside their household. Many broadband subscribers share their access for free, though, and it’s hard for ISPs to stop them.
Traffic from a FON-connected hotspot would be easy for an ISP to identify, said Glen Fleishman, editor of the Wi-Fi Networking News website, because users would have to authenticate themselves at a FON server.
Varsavsky wants to partner with ISPs to get them to allow their subscribers to set up FON hotspots. FON has signed up Glocalnet, a Swedish ISP, and is in talks with U.S. companies.
To win over the ISPs, Varsavsky says, Linus members must have Internet service to be members.
“So in fact, FON is an incentive to become a customer of an ISP,” he said.
Mark Harrad, a Time Warner Cable spokesman, said the New York-based company was not aware of FON’s plans. Its terms of service prohibit its 4.8-million residential broadband subscribers from sharing their connection outside their household.
Representatives at Google did not return messages seeking comment on the search engine’s investment in FON.
“FON has a great idea to help people share Wi-Fi with one another to build a global unified broadband network, and we’re happy to lend support,” Skype Chief Executive Niklas Zennstrom said in a statement.
