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Summary:

FON, the Spanish share-your-Wi-Fi services company, is close to announcing a new round of funding that could total to as much as 10 million Euros (shade over $13 million.) While some of its existing investors – Index Ventures, Skype and Google – are coming back with […]

FON, the Spanish share-your-Wi-Fi services company, is close to announcing a new round of funding that could total to as much as 10 million Euros (shade over $13 million.)

While some of its existing investors – Index Ventures, Skype and Google – are coming back with more cash, the word from telecom circles in Europe is that British Telecom is going to invest in the wireless router company. It is one of the new strategic investors in the company. FON had raised about $22 million in a previous round of funding. With this round the company has raised close to $35 million in venture capital funds.

FON is the latest start-up by Spanish telecom entrepreneur, Martin Varsavsky, who has made a name for being a thorn in the side of incumbents. Ah the sweet irony that is life! We have not been able to confirm the rumors so far, but will update the story with more info as it surfaces. Varsavsky declined to comment.

There were some rumors of a partnership between FON and British Telecom, where FON software was going to be bundled into BT Wi-Fi gateways. If you are wondering why BT is interested in FON, there is a seemingly logical explanation.

When I visited BT last summer while reporting a story for Business 2.0, the senior management of the British incumbent carrier was pretty bullish on the whole notion of dual-mode phones and municipal wireless. They talked about their Fusion strategy quite excitedly, even though the first version of BT Fusion was BTF: big time flop.

Dual-mode phones are phone that have Wi-Fi and cellular capabilities in one single handset, and in an ideal world there is a seamless handoff between the two networks once you are in range of a Wi-Fi network. [Okay those of you, who are smirking in the back of the class, stop, because we all know the jokes.]

While this does seem like a distant dream, eventually it will happen. Nokia, for instance, is pretty confident that most of its mobile phones in the near future will have Wi-Fi capabilities built into them. BT can offer voice (and other services) over Wi-Fi when in range of a FON node, and when out of range it can switch to the Vodafone network for cellular access.

T-Mobile USA is trying something similar up in the U.S. Northwest, though it is through a customer’s own Wi-Fi network. Free.fr of France has also been playing with a similar idea and has bundled FON-like software in its residential gateways.

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  1. Unlike most incumbents BT doesn’t have a mobile subsidiary: BT Cellnet was sold a few years ago (2001?)

    With no cellphone business to cannibalize, BT’s free to partner with FON, push dual use phones (the “bluephone” etc) and seems excited about WiMAX.

  2. Ah jeez,

    I thought I might have gotten a by-the-by.

    b

  3. TechCrunch en français » 10 millions d’euros pour FON Wednesday, March 7, 2007

    [...] à jour: selon GigaOM l’investisseur stratégique en question pourrait être British Telecom Tags: web2.0, [...]

  4. Jack Pendelton Wednesday, March 7, 2007

    It seems that you have been given Fon shares, Om, by putting out rumors, promoting them by giving away routers…maybe you can clarify why you are so interested in this startup.

    The BT deal is actually contrary to your speculations, Fon is going to pay BT so that its users can get connected, kind of a roaming agreement. Do you really think BT would risk putting an unproven and buggy (check the Fon forums) firmware on their own routers? Why would BT invest in Fon anyway, what do they have to gain?

    Nothing to see here, please move along….

  5. BT likes the sound of FON…

    Om has the goods on FON, a rapid growth startup. Skype, Google and now BT have all FON’ed in. When one looks at FON mapswe begin to understand, it seems like they are doing a good job of blanketing the……

  6. Beta Alfa » Hej! 2007, FON och sladdlöst surf Wednesday, March 7, 2007

    [...] circles in Europe is that British Telecom is going to invest in the wireless router company” skriver [...]

  7. Glenn Fleishman Wednesday, March 7, 2007

    “T-Mobile USA is trying something similar up in the U.S. Northwest, though it is through a customer’s own Wi-Fi network.”

    In Washington State only, five months into the trial, which is strange. It’s still not ready for prime time, one might conclude.

    And all T-Mobile hotspots are included in the Wi-Fi roaming deal. I tested the service and the dual-mode phone automatically recognizes and connects to T-Mobile service in Starbucks, etc.

    As for “Jack Pendelton”: Just because Om is bullish on a service doesn’t imply that he has shares in the company. I think ethical slurs should be restricted to actual knowledge.

  8. Thanks Glenn for the clarification on T-Mobile and the update. We can always count on you. And more over thanks for looking out.

  9. iLinux.mobi » Rumor Mill: BT to invest in FON? Wednesday, March 7, 2007

    [...] more on the rumored VC round: – see this article from [...]

  10. Dear Jack Pendelton,

    To set the record straight, you clearly don’t know what you are talking about.

    1. Giving away routers – the readers benefitted from it, that’s why we gave them away.
    2. This is a story which clearly neither BT or FON wants to be out, which proves you wrong.
    3. I don’t own shared in FON or in fact any other company except my own. Never have and never will. It is as simple as that.
    4. Lastly, before you make disparaging remarks, how about taking a deep breath.
    5. You are entitled to your opinions, but hopefully this will give you something to think about.

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