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October 04, 2007

FON and BT – Wifi Today; Mobile Tomorrow?

A deal announced today between British Telecom and upstart FON allows BT’s Internet customers to share their own broadband connections via WiFi and, in turn, be able to access WiFi free at “thousands” (doesn’t say how many) of FON hotspots around the world operated by other Foneros. Net: when you buy home Internet access from BT and opt into this plan, you are also buying roaming access at no extra charge. The technology is supposed to assure that the part of the connection which you share is segregated from your own access so that there are no security problems caused by the sharing.

Eventually, the most interesting use of all these easily-accessible hotspots may be use by WiFi-enabled cellphones. Note that BT – as a result of divestiture – does not have a physical cellphone network and associated towers of its own. Therefore, BT has a lot to gain and nothing to lose by siphoning over-priced minutes away from traditional mobile networks and on to its own IP network. But that is only practical if there is Wifi widely available which does not require a complicated signon or at least has a simple signon which can be programmed into mobile phones. The worldwide network of Foneros –assuming it grows to significant coverage – could be exactly what’s needed for BT to provide roaming voice connectivity.

FON has been supplying its own router/WiFi hubs which enable this type of sharing worldwide for years. In April, FON announced that Time Warner in the US would allow use of FON equipment by subscribers to TW’s broadband access – some carriers have branded this use as a violation of their terms of service.

According to the FON blog, BT has over 3 million customers for its Total Broadband Service – all of them are eligible to start sharing and just have to register. But non-BT customers can join as well: “If you are with another ISP buy a FON Community Wi-Fi router and register for the BT FON Community. You'll then get easy Wi-Fi at home and free Wi-Fi everywhere.” Hmm… Buy a router; stop paying extra rent for roaming. (A series of posts on rent vs. buy starts here).

BT, a former monopoly, was forced by its regulator to allow competition. After initial grumbling and blithering, the company’s response has been creative.  The FON deal is the latest example. One more example for the US of how a lot of competition goes a long way to spur innovation and improve the quality of overall service while lowering price and increasing options. Sad that we need to be taught that lesson but even sadder if we don’t learn it.

I first blogged about FON over a year ago, even ordered a FON router but never installed it. Really should.

Updates: In a post on his blog FON founder Martin Varsavsky says that BT has also become a shareholder in FON. Om Malik, who first reported rumors of the deal in March, now reports rumors that FON will pay BT $8-$10 per customer who signs up; this was immediately denied by Varsavsky in a comment on OM’s post in which he says that BT is paid only a portion of the revenue received from nonFoneros (aliens) roaming on to the network and also adds that existing BT hotspots in airports, train stations etc. will be open free to Foneros (that’s big if you go to the UK). TechCrunch says the deal seems “screwy” but they are reacting to the now-denied rumor of a bounty per sub from FON to BT.

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