Fon A Friend As Networks Fear Data Jam

When it launched in 2006 Fon, a Madrid-based start-up that offers a global Wi-Fi sharing service, was seen as a radical threat to the giant telecom industry.

Things haven’t exactly turned out that way. Once feared as a foe, serial entrepreneur Martin Varsavsky, a scheduled speaker at 4 Years from Now, during Mobile World Congress in Barcelona, February 24th to February 27th, is thriving by positioning himself as the operators’ best friend. And, in January, Fon came closer to its goal of placing itself at the heart of the Internet of Things, announcing a $14 million round led by chip maker Qualcomm, a deal that looks likely to cement its transition from interloper to industry insider.

Varsavsky, who started half a dozen companies before he turned 40, specializes in disrupting the telecom industry. The native Argentinean pioneered callback services when he launched Viatel in 1991, exploiting loopholes in EU regulations to challenge the continent’s dominant phone companies.

Serial entrepreneur Martin Varsavsky, who started half a dozen companies before he turned 40, specializes in disrupting the telecom industry

Since then, he built Spanish Internet company, which famously lured away 25 Telefónica executives in a single day and was sold in 2001 to T-Online International, Deutsche Telekom’s internet subsidiary for €550 million. He also founded Jazztel, one of Spain’s largest public telecom companies and a continuous thorn in Telefónica’s side.

Mobile Operators Embrace Fon

When Fon — Varsavsky’s seventh start-up — originally got backing from Skype, Google and venture capital firms Sequoia and Index Ventures to start spreading ubiquitous wireless broadband access, telecom industry executives were understandably worried. At the time Wi-Fi was seen as a service that would replace traditional cellular technology by beating it in both performance and price. What’s more, telco rules did not allow for Varsavsky’s vision that everyone would benefit if only users could share Wi-Fi connections and seamlessly get online anywhere on the globe.

But times have changed. Wi-Fi came to be seen as a complement, rather than an alternative, to traditional mobile carriers’ networks. BT was the first to modify its sharing rules to accommodate the service. Since then 13 other telcos have signed up as partners, including Japan’s SoftBank, which gives every purchaser of an iPhone a Fon router and configures the phone in the store to connect to Wi-Fi for faster mobile data services. Fon is currently setting its sights on emerging markets, such as India and, now that SoftBank has majority control of the U.S. telco Sprint, it is better positioned finally to crack the U.S. market.

Mobile operators are embracing Fon because they are desperate to offload data traffic, which is increasing dramatically. Globally, the traffic has been doubling each year during the last few years and mobile networks can’t handle it. With the Internet of Things becoming a reality the industry is preparing for a 1000x increase. “There is no way that only mobile can meet the demand,” says Varsavsky. “The future is LTE and Wi-Fi, with Wi-Fi playing a big role in offloading traffic. When I launched Fon it was too early. Now we are at the perfect time.”

Fon ‘A Leader in the space’

Qualcomm agrees. “There is a huge deluge of data coming and what is interesting about Fon is that if I have their client on my handset it can automatically log me on as I move around helping with throughput,” says Miles Kirby, the managing director of Qualcomm Ventures responsible for activities in the European region and a new member of Fon’s board. “It is a great complement to wide area networks and we see Fon as a leader in this space.”

Luckily for Fon, Wi-Fi itself is evolving. A new Wi-Fi standard in the works will allow for lower energy consumption and for the technology’s practical use in both short-range and long-range applications. So, four years from now Varsavsky says he thinks that other technologies used to connect gadgets now, such as Bluetooth Low Energy, Zigbee and Z-Wave, will be on the decline. “Wi-Fi will be at the center of the Internet of Things,” he predicts (see the story about wireless technologies underpinning the Internet of Things on page 9).

As it happens, Qualcomm is placing bets on a variety of wireless technologies underpinning the Internet of Things, among them low-energy Wi-Fi.

Last September the chipmaker’s subsidiary Qualcomm Atheros launched a new chip family as part of its portfolio of low-power Wi-Fi solutions designed to enable customers to add Wi-Fi to virtually any product with minimal development effort or cost and to write their own applications on the Qualcomm Atheros platform instead of simply using it for Wi-Fi connectivity. Target applications include home appliances such as washing machines, consumer electronics, and sensors and smart plugs for home lighting, security and automation systems.

Deal with Facebook

Already Qualcomm and Fon are working on a product, to be announced in May, that will combine Wi-Fi with music, says Varsavsky. And there is speculation that Qualcomm will integrate Fon into other Atheros chipsets, making it available as part of the SDK so that third parties using the chipsets will also be able to integrate Fon network access.

“There is great potential for collaboration on the product side but we don’t have specific announcements to make yet,” says Stuart Strickland, director of product management for the Wireless Infrastructure Networking division of Qualcomm Atheros.

Fon’s expansion plans are likely to be aided by a new deal with Facebook which will let people share their home Wi-Fi hotspots with Facebook friends with no need for passwords — a product that Facebook and Fon also plan to offer in brick-and-mortar shops, giving users free Wi-Fi when they “like” or check in to a location.

Fon may not have succeeded in overturning the telecom industry but with so many irons in the fire it looks like it will be very much a part of its future for some time to come.



Related posts