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Tuesday, February 07, 2006

Sword of Damocles hanging over telcos?

An excellent summary below of the Google, Skype, VC link up with Wifi Entrepreneur from BWCS (www.bwcs.com).

This is yet another example of the strategy of the internet players to get around the operators and, in so doing, gain greater leverage in future negotiations about cooperation. Essentially it's about creating a 'bacterial network' using unlicensed wifi to piggy-back on everyone else's broadband costs.

The telcos will start to complain to the authorities about unfair competition, but will get further by highlighting "security concerns". The former may make the German, French and UK authorities take action, the latter will engage the US homeland security people. Nevertheless, we will see more of these sorts of developments. The need for the telcos to respond effectively will be felt more keenly over the next 12 months...

"Foneros to Offer 'Free' WiFi Access
(06/02/2006, BWCS Staff)

Madrid-based wireless software company Fon is set to announce US$30 million (euros 18 million) in funding for its ambitious scheme to launch a global network of shared WiFi connections. The backers include such luminaries of the technology world as search engine giant Google and VoIP pioneer Skype (now part of e-Bay), as well as a smattering of venture capitalists.

The company claims that it will build a "block-by-block" network of "Foneros", people who are willing to share their WiFi connection with other, fellow "Foneros". According to Fon, anyone with a built-in WiFi link, on any device, can participate.

The Spanish company’s website argues that the success of the movement, like the success of all online communities, such as e-Bay, Skype, ICQ and IM, will depends on how many people join. To begin with, the company accepts that the attraction of becoming a Fonero will be limited, but as word spreads – helped on by this latest round of funding – the attractions will become more obvious. At that point Fon’s site declares "The dream of a unified global broadband wireless signal will becomes a reality. The Fon movement, as we call it, can achieve what 3G or EVDO has not - a truly broadband wireless Internet everywhere." According to the company, it only takes two to four WiFi users/donators per city block to provide a decent level of WiFi coverage for all.

The service was launched three months ago and has so far attracted some 3,000 Foneros. This relatively paltry number is brushed aside by the company, "3,000 registered Foneros puts us at 10% of our 2006 objective in only 3 months: to become the largest hotspot network in the world by the end of the year. Currently, the largest global hotspot networks have around 30,000 hotspots." However, the company is aware that it could face legal challenges from established broadband providers who forbid users from sharing access.

The new movement was started by Martin Varsavsky, an entrepreneur from Argentina who has already founded two major Spanish communications companies: Jazztel and Ya.com. Far from upsetting ISPs Varsavsky claims his movement will aid them by increasing their audience, to that end he hopes to work with established ISPs such as Telefonica, Deutsche Telekom, AT&T and Time Warner in the future." (www.bwcs.com).

The Editor, IMS Insider

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