by Carlo Longino

FON Tries To Make A Market In Undercutting Starbucks' WiFi Fees

from the the-decaf-of-business-models dept

While the commercial prospects of the WiFi network FON may not be clear, the company certainly is good at drumming up publicity for itself. It started off by letting users decide whether they wanted to be a "Linus" or a "Bill" -- Linuses let people use their hotspots for free, and in return get to use the rest of the network for free, while Bills charge for access, split the proceeds with FON, but don't get free roaming. It then got back in the news when it attracted some big-name backers, but a viable business model still doesn't seem to have emerged, despite comments from the company's charismatic founder that it wants to build a ubiquitous network and take on mobile operators. FON's been getting some ink again lately because it's been giving away thousands of free WiFi access points (with no real clear plan of how to ever generate revenues with them), and it's back in the news today with a plan to give free hardware to people who live near Starbucks locations. It's hoping to convince them to become "Bills" and generate some revenue by undercutting the rates Starbucks and its hotspot provider, T-Mobile, charge for access. FON charges $2 per day, compared to T-Mobile's $10 -- and then gives $1 to the user providing the actual hotspot. It's nice to see the company's taking some steps to try and generate some revenue -- since the problem from the outset has been that everybody could simply choose to be a Linus, and no money ever comes in -- but the plan may be built on the faulty assumption that there's actually a huge pool of Starbucks WiFi users looking for a cheaper day rate. Back in 2004, it certainly didn't look like Starbucks WiFi was making much money, and a lack of noise since then makes us think little has changed. Obviously $2 per day is a lot less than $10, but with so many other coffee shops and other places offering free WiFi, it's hard to see FON's plan generating much more than some additional publicity. And, last time we checked, publicity on its own doesn't pay the rent.

Reader Comments (rss)

(Flattened / Threaded)

  1. identicon
    Ipzedge, Feb 21st, 2007 @ 2:53pm

    T-1 / T3 for as little as WiFi For $20

    Investment capital over Thirteen Billion (US$13,000,000,000.00+) was secured in 2003 In 2004 the USA Government and Securities Exchange Commission approved the IPO* Testing of T-1 service (with 128-bit encryption) has been 100% successfully completed Competitors can't develop comparable technology without 3+years and billions invested Service goes live in Texas, California, Washington state and Canadian cities in 2007** 1st quarter 2007 mountainous terrain signal testing scheduled for WA, OR, CO, & B.C. By 2008 the WiFi Corporation plans blanketed WiFi coverage of all Canada and USA Within 12-months of North American opening, plans for worldwide WiFi service begin

    reply to this | link to this | view in thread ]

  2. identicon
    possible issues, Feb 21st, 2007 @ 2:55pm

    The T-Mobile hotspots require a dedicated T1 line. With the T1 line, Starbucks has the right to share their internet service.

    Many other companies have DSL or Cable. It is agaisnt their terms of service to share/broadcast their service. Think of it the same way as 1 apartment in a building paying for cable, and everyone else in the building splitting off of that cable. It is illegal.

    This could eventually result in a lot of lawsuits from the telecoms.

    reply to this | link to this | view in thread ]

  3. identicon
    the issue is.., Feb 21st, 2007 @ 3:39pm

    The issue with ISP's is not sharing the connection for free, (wouldn't all open wifi routers then be a breech of contract?) it is in CHARGING for access to said wifi...

    The reason FON is not worried about it, is that the ISP's cannot go after FON, they would have to go after their own paying customers.

    They are unlikley to do this, instead they will fall back on monthly usage limit.

    In reality, this is the better model to work off of, let the customer pay for their connection, and don't worry about what they do with it, even if it is reselling it. However, once they have reached their monthly limit that they are paying for, cut them off.

    reply to this | link to this | view in thread ]

  4. identicon
    Julia, Feb 21st, 2007 @ 3:57pm

    Starbucks wi-fi

    I pay $50 a month for my T-Mobile wireless account, connected to my T-Mobile PDA, and I have a connection almost everywhere I go. I was never impressed with the idea of paying for wi-fi access just at Starbucks. Another company provides wi-fi access for McDonald's customers. It's insane to expect a consumer to pay piecemeal for wi-fi access in fixed locations.

    reply to this | link to this | view in thread ]

  5. identicon
    Sean, Feb 21st, 2007 @ 7:05pm

    "Business Class"

    As far as the ISP is concerned, a business is most likely paying for a business class service, which will typically allow sharing that internet connection. I pay for a commercial internet connection so I have no problem being a Linus and sharing my connection.

    reply to this | link to this | view in thread ]

  6. identicon
    Bill Madden, Feb 22nd, 2007 @ 6:05am

    Re: Starbucks wi-fi

    Are you aware that T Mobile has a speciaal plan if you have cell phone service with them. It's only $19.99 a month with no contract.
    Maybe it's worth it to switch carriers ?

    reply to this | link to this | view in thread ]

  7. identicon
    Nobody Special, Feb 23rd, 2007 @ 7:49am


    Wish I lived near a Starbucks. I would try it out and see if I could make some money. I think this is a great idea.

    reply to this | link to this | view in thread ]

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