Yesterday we signed our third large contract with an ISP. So far we have only disclosed one Glocalnet, the second largest ISP in Sweden. The other two we will be able to disclose when we are ready to launch in around 90 days. It´s remarkable how similar all our meetings with the ISPs are. First they mistrust us. They think Fon is about sharing connections, something they clearly dislike as it reduces their potential customer base. Indeed in many cases it is difficult to get the first meetings and if it weren´t for some of our board members and partners we would probably not even get a chance. But when we have our foot in the door and we explain exactly how Fon increases ARPU and reduces churn, ISPs do a 180 on us. The key here is our rules. First on prices. Fon will charge aliens (paying customers who pay because they have not donated wifi) $2 in the States and 2 euros in Europe. This rate is a bargain for 24 hours. With this rate we become the “easy jet” of wifi. But interestingly this rate is not low enough to get a neighbor to want to connect through another neighbor. In France for example you get good monthly broadband connections for 22 euros per month. So at 2 euros per day it just does not pay to be an alien. People in this case prefer to become foneros, sign up at home, pay their local ISPs and join Fon for free and get free global roaming. The Fon rate is good for roaming, not for home use and in this way we protect the ISPs. Still our offer to ISPs who commit to make all their new connections fon ready (customer chooses activation or not of course) is that we give ISPs half of that money in case of a Linus fonero and half of what we get after paying half to a Bill fonero (or 50c) in case of a Bill fonero. Bottom line is that ISPs realize that they are seating on a a lot of unexpected revenues. That with fon they become part builders of a global wireless network that increases the ARPU per connection and increases customer loyalty as after Fon they pay at home and get bandwidth anywhere in the world. And all this comes at no cost to the ISP and we let them use our brand in their promotions. This is how we are converting ISPs and getting new foneros at the same time. Foneros also like to know that they only share with those who share with them. By the way our year end target was 25,000 registered foneros but today we will hit 20,000. Also United States went from being one of the last countries last month to being first in number of registered foneros. We started in Spain but now USA leads which is normal just because of the incredible amount of broabdband connections there are in this country.

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Paul van Kofner on March 1, 2006  · 

That is quite interesting, but I won’t share my broadband connection until I know for sure that I’ll be able to get free internet thru FON wherever I go.

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Dan on March 2, 2006  · 

That is very good news Martin, congratulations.

1) The major ISPS in NA are offering VOIP packages, similar to Vonage. There are several of the systems around. How do you see the fact that you are backed by Skype and the effect of Skype use through FON hotspots would have on the ISPs?

2) Some major ISPs offer Wi-Fi hotspot systems and services, which they are deploying through outlets such as corner stores, mail stores, and even telephone booths. They have invested or are investing hundreds of millions of $ in this. How do you address the effect of FON on this particular service they offer?

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Martín Varsavsky on March 2, 2006  · 

Hi Dan,

FON´s target was to have 25K foneros by year end, at the rythm we are going we will do 20K this month alone. We are quickly becoming the largest hotspot network in the world but it´s a random network, mostly residential. FON aims at having roaming agreements with all networks and in this way increase value to our partners and to foneros as well.


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John Noerrer on March 7, 2006  · 

Martin —

Just a quik question. If I become a ´Bill´ and an Alien uses my network and that of other ´Bill´ Foneros, how is the revenue split?

Alien connects to my Hotspot (Bill-1). He pays EUR 2.00 to FON, I get EUR 1.00. Then he connects, within the same day, to another Bill Hotspot (Bill-2), but presumably doesn´t pay again.

Does Bill-2 get any money?

The same equation can be done with the ISPs.


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andreas w gerdes on March 8, 2006  · 

great business you are building.

will attempt that all wifi routers in Andes, New York, become foneros.

you can see in the article of the new york times that Andes, New York, has the first wifi enabled main street in the usa.

would be very happy to support the role out of foneros around the world.

what are your plans and timelines for asia?

have a great day, andreas

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Nago on March 14, 2006  · 

The model is faulty imvho – most people will prefer to share their connection with neighbours, if only just because they live in residential areas and not the ‘CBDs’ where roaming might be wanted.
Neigbours will still share their connections using the local accounts AND get free roaming in the fon network.

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