Fon and the ISPs

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.