Sweden’s Anyfi turns any Wi-Fi network into a small cell

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Iliad’s Free Mobile is shaking up France’s wireless market with a cheap mobile data service that uses millions of residential broadband Wi-Fi access points to offload 3G traffic. Why haven’t more carriers followed Iliad’s lead? Most carriers don’t have the Iliad’s ingrained advantage: it manages both its customers’ handsets and their Wi-Fi routers.

For another mobile operator to replicate such a feat it would not only need to strike partnerships with a broadband provider or hotspot aggregator, but it would also need to implement special handset clients or wait for new technologies like Hotspot 2.0 and Next Generation Hotspot to wend their way into the market.

Swedish startup Anyfi Networks, however, has developed a technology that bypasses those steps, potentially turning any access point into an extension of a customer’s home wireless LAN. Anyfi’s technology breaks the tie between the physical radio and the Wi-Fi network, connecting your device to myriad access points and public hotspots you have never encountered before. According to co-founder and CEO Björn Smedman, Anyfi automatically spawns “virtual hotspots” that your device treats just as it would your home network.

Every device sees the totality of an operator’s ‘network,’ whether it’s the Wi-Fi embedded in its own or a partner’s residential broadband gateways, a public hotspot network or even an open access point with Anyfi’s software installed, said Smedman, co-founder and CEO. “Whenever it sees that network it will automatically connect,” Smedman said. “We’re creating virtual access points that make every Wi-Fi access point accessible to every network.”

Smedman said the technology could be used in any a number of scenarios. If a carrier is both a wireless and wireline operator like Free Mobile (or AT&T and Verizon in the U.S.), it can leverage its existing install base of residential gateways to link its mobile and home broadband services together. A cable operator like Time Warner could augment its public hotspot with millions of home connections, or sell that access to a wireless operator looking to offload traffic from its 3G or 4G networks.

No software is required on the device, and the access point or residential gateway requires only a remote software update, Smedman said. Anyfi is already working with gateway maker Hitron to integrate its technology into existing products through firmware updates. If a carrier chooses to use the technology, it licenses the rights directly from Anyfi.

Consumers may not like the idea of strangers logging into their home Wi-Fi network, but Smedman said that never happens. Though the technology utilizes the physical radio in the residential gateway (which in most cases is owned by the operator) outside devices aren’t actually accessing the gateway’s secure home network. Instead, Anyfi’s software tunnels Wi-Fi authentication protocols to the device owner’s home gateway. From the device’s point of view, it’s at home. From the access point’s vantage point, it’s running two separate networks, one private and one public.

Anyfi is trialing the technology with a European and a North American operator, though he would not reveal their names. Smedman and his co-founder CTO Johan Almbladh studied applied physics together at the Lund Institute of Technology, after which they went their separate ways to work in different fields in the tech industry. The two got back together in 2009 to develop and patent Anyfi’s technology and then founded Anyfi shortly afterwards in Malmö, Sweden. The company, Smedman said, has raised “less than $1 million” in seed funding from investors and angels in Sweden.

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