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FON, Time Warner deal confirmed

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It has been more than twenty days since we reported that FON, the share-your-Wi-Fi service company was in talks with Time Warner Cable. Today, a news report from Associated Press confirms the deal and adds, that Time Warner Cable “will let its home broadband customers turn their connections into public wireless hotspots, a practice shunned by most U.S. Internet service providers.” Time Warner spokesperson confirmed the deal, though the two companies didn’t give any specifics.

FON is taking a shot at T-Mobile’s Wi-Fi service, with Joanna Rees, chief executive of FON USA adding, “They’re extorting people.” Lets just say, that is a bit of an overstatement – $30-to-40-a-month for a service that is reliable (if not fast) hardly counts as extortion.

Despite all the buzz, FON has a miniscule presence in the US and may not be that appealing to business travelers, who are short on time, and always look for convenience. Starbucks-T-Mobile does offer that. From that perspective, FON has its work cut out.

Meanwhile, since our big FON giveaway, some folks have written to us, and have pointed out that there is a bug in the firmware of the FON routers. Apparently, the default bandwidth control is broken. This is a way to allocate the bandwidth for the hotspot, and can be configured by the users. The bug, however takes away the bandwidth control, and visiting Foneros can suck all the bandwidth. This bug has been mentioned on FON boards.

Disclosure: GigaOM readers were offered FON routers for free as part of a special promotional offer.

10 Responses to “FON, Time Warner deal confirmed”

  1. I was one of the lucky people who received a free FON device courtesy of Om Malik and I was very excited and anxious to switch from my Linksys wireless router (WRT54G) to FON as it offered me the ability to have a public and private wireless all through my Time Warner Cable cable modem. Well, that’s all just “pie in the sky” as far as I’m concerned now. I’ve spent the last 48 hours trying to get the darn FON router setup. Just a note here that I work in the IT industry for a major corporate so I SHOULD be able to get this setup very quickly. Well, I’m just about ready to invite all my friends and relatives over for a huge bonfire next weekend wherein I’ll toss the FON router into the flames and shake my fist triumphantly in the air. Ugh, what a horrible product and a waste of the last two days.

    I say do not purchase the FON product as it simply DOES NOT WORK!

  2. Om, the link at the end of your article, to the fon board post about the bandwidth bug, had been censored by Fon. I see now that it has been restored to the board. How did you accomplish this?

  3. Could this be the indication of a new wireless strategy for the cable industry? Is their plan to create a nationwide internet access system, paid for by their subscribers, to combat the telephone companies? Cable is successfully taking traditional telephone lines away from the ILECs, but cable has no cellular phone service. Rather than paying for the nationwide build out of a wireless network, why not have your customers, along with FON, create and pay for a new wireless network?

    Here’s one potential problem, as Simon points out: the FON network seems to mostly deal with residential areas. But what if the cable companies (or FON) went to the cable companies’ commercial customers and asked them to install wireless access points? The cable industry is currently in the process of ramping up efforts to provide broadband services to businesses (yet another effort to hurt the telcos).

    Obviously, there are a few questions that need to be answered before cable embarks on this strategy. They must make sure the wireless access points are secure. They need to figure out who will pay for the routers. Obviously, whoever pays for the routers will want to be compensated for those costs. And what how will the cable companies be compensated? Or is it enough just to squash one of the few remaining growing businesses of the telcos? And how will the people who house the routers be conpensated? Obviously, FON already has a strategy for dealing with these issues, but the question is, is their strategy the best one? Could cable use the FON strategy, without FON? Do they want to buy FON?

    I do think that this idea shows promise because it seems very cheap. One of the expensive parts of building out a network is all the installation costs. Under this scheme, it seems like those costs should be almost zero. Also, the backbone for the network is already in place and being paid for. The major cost, it seams, would be the cost of the routers. I’m not sure if the routers need to have some sort of special functionality in them, or if they are just stock models.

  4. Congrats to Fon on striking this deal, I know they’ve been at it for some time, and it finally came through.

    I just have one doubt – non-Foneros have to pay $3 a day for Fon WiFi, which comes in at $90 for a 30-day month. I cannot find the place in their pages where it said subsequent 24-hour passes were only $2, but even then, a month comes to $61, more expensive than T-Mobile’s $40, which can be cheaper if purchased yearly, or if you have a cell voice plan with them.

    Fon could offer cheaper monthly rates, but then it would start cannibalizing the ISPs it is partnering with. Maybe someone could update me, but cable hovers around $40 a month, with DSL at around $30 a month. It would be hard for Fon to justify selling monthly subscriptions at say $15 or $20 on the same lines an ISP is selling for twice that much.

  5. Joe Hopkins

    FON is not exactly a hit here in the US – the number of confirmed active access points in major US cities counts in a few dozen, at best, and doesn’t seem to grow much. So I guess all Time Warner is admitting to now is ‘we can’t sue or take action against our customers who are foneros, so we declare what’s already going on anyways legit’. Very risky for them to endorse a little Spanish company that barely seems to have any presence here in the US. Especially since anyone with a FON hotspot can easily ‘sniff’ and decode the traffic stream once it goes out over the wire – unlike at commercial hotspots like T-Mobile, the over the wire portion is not encrypted. Brilliant idea, but hardly useful here in NYC.

  6. Really interesting approach here by TW and FON. Security issues aside, it’s interesting to think about how big the footprint would be if everybody just opened up their own broadband for public use. In many cities this might effectively create a broadband cloud – at least in the densely populated sections. As N routers come online we could see large areas of hotspots. I’d say it’s not clear if there is a sort of diminishing return on the broadband footprint. Most people who want it can now arrange to be at home, coffee shop or other hotspot as needed, though it’s appealing to think of simply having broadband “almost everywhere you go” as with cellular broadband.

  7. The biggest problem with FON is that they are targetting residential internet users and therefore the hotspots will be in residential areas. The stereotypical roadwarrior who wants to find a hotspot is going to be in the business or industrial parts of town. Also with wifi in a Starbucks I can combine my surfing with having a coffee and a panini. With a FON hotspot I’d be sitting in the car outside someone’s house.