2010: the Year of WiFi, the Year of FON

FON struggled initially in 2009. But we managed a steady turnaround and ended the year with phenomenal results. In September, we reached breakeven and launched a new WiFi device, the Fonera 2.0n. From Q1 to Q4, we increased our monthly gross revenues by 250%, decreased costs by more than 60% and tripled WiFi access. FON now has over one million FON Spots worldwide.

The outlook for FON in 2010 is even better thanks to the ever-increasing demand for WiFi. FON is well positioned, growing strong in several directions, including sales of passes and routers to individuals, and partnerships with fixed and mobile operators.

The FON community is growing because people want more access to free WiFi while roaming, and a superior WiFi experience at home. Our fixed partner list, including BT, ZON TVCABO and Comstar Russia, is growing because operators now clearly understand the importance WiFi and the benefits to partnering with FON. They reduce churn and customer acquisition costs, sell more broadband and increase ARPU. Our mobile partnerships, including E-Plus Group (a division of KPN), SFR and others yet to be disclosed, are growing because operators can offload data traffic. In sum, mobile and fixed operators who partner with FON make more money, reduce costs and get higher valuations than the competition.

Industry players are calling 2010 “the Year of WiFi”. RBS expects WiFi to play a key role in the world of fixed and mobile Telcos and significantly influence their value. For example, E-Plus, our mobile partner in Germany, was the only mobile company not downgraded by RBS for 2010. RBS and Morgan Stanley recently named BT, our major Telco partner in the UK, “Top Pick” for 2010. RBS specified that BT’s partnership with FON (BT FON) put it “in a strong position” and offered it “a great chance to benefit from WiFi.”

Benefits aside, many operators may soon be forced to embrace WiFi out of pure necessity. WiFi is quickly becoming an alternative to mobile data subscription. Demand is increasing rapidly for WiFi-only devices such as the iPod Touch and for WiFi-enabled devices, including smartphones (especially Apple iPhone, Google Android and RIM Blackberry), laptops, notebooks, eBooks, tablets and even TVs. Within three years, mobile networks may become “infill”, useful only between WiFi spots. Within five years, all phones in the US may be smartphones. RBS notes that WiFi progressions like these may very well occur faster than current market estimates due to the enormous cost savings for the customer (up to 50% on a usage-based mobile phone bill) and the influx of WiFi innovation (“smarter” gadgets, faster WiFi signals, value-added services such as voicemail to email, etc.). Finally, attempts to regulate or constrain WiFi growth or VoIP are not expected to stand up to public pressure.

I am calling 2010 “the Year of FON”. Not just because what’s good for WiFi is good for FON and our partners, but based on FON’s record-breaking sales already this January. We sold over 400,000 Foneras SIMPL to an important mobile operator, our largest order in history.  We also have several new partners and products in the pipeline.

I predicted the imminent importance of WiFi when I started FON in 2005. Since then, WiFi usage has skyrocketed and FON has become the biggest WiFi community in the world. With no slowdown in sight, 2010 should be the year for both.

Sources:
RBS: Telecommunications Equity Europe Report, 13 January 2010
Morgan Stanley: Telecommunications Services Industry Review, 4 January 2010
Frost & Sullivan, 2010 Outlook & Forecast: Mobile & Wireless Communications