Why Does FON Give Away Routers In The Form Of The Fonero Promise?

When we started FON, our idea was to develop a piece of software that turns your router into a member a global family of routers who share wifi. So first we released an open source download that would convert certain router models into FON routers but we failed with the download model. Even though FON appeared in most blogs, the New York Times and many newspapers and magazines around the world, we discovered that there were not enough people interested in a download. We diagnosed this lack of interest for three reasons: first, people saw little value in being early adopters, second, they feared that sharing would leave them without bandwidth; and third, they were afraid that strangers would get into their WiFi networks (now many people have WiFi printers, WiFi media servers, etc).

So in April 2006, we changed our strategy and decided to work on developing a piece of hardware that addressed all these concerns: the La Fonera. For this effort we had to hire many engineers, and it was a very difficult task to accomplish. But in only 5 months we designed, built and launched the La Fonera. And that´s when FON really took off. Since Oct 2006 we received orders for over 130K FONspots. We now have over 100K registered FONspots around the world and are 4 times larger than T Mobile WiFi in terms of number of WiFi points, and we are growing the size of a T Mobile every month (something that we must do to show value to the Fonero as we have more FONspots but they have better locations). Why were we successful with the La Fonera?

First because of the strategy of giving them away for free until we reach Fonero densities of 1 in 10 inhabitants in a given country. This broke the paradox of not wanting to be first joining a social network as those who joined first got a WiFi router for free. Secondly because with the La Fonera we addressed the issue of not being left without bandwidth (we protected the Fonero with a bandwidth throttle). Thirdly, at FON we came up with the first WiFi router with 2 SSIDs or one router that sends two different WiFi networks called MyPlace and FON. This made it clear to Foneros that there is one big firewall between their own WPA protected network (MyPlace) and the FON public network. And to make it more attractive, we added the Bill model that also became possible thanks to the La Fonera. Bills tend to be commercial establishments who find the La Fonera installation extremely easy and who want to make money offering WiFi.

Now here´s an update for the States. At FON we were concerned about doing the Fonero Promise in the States because the country is so huge. A blanket Fonero Promise like the one we did in Germany and Japan could get out of control. So we decided instead to go with a very timid approach and do a campaign limited only to one of my favorite tech blogs Gigaom.

We chose Gigaom because Om Malik was a skeptic about the initial FON model, and we slowly turned him around when he tried out our new La Foneras and the whole support system for them. This made him a very credible source. Also there was no money involved. We did not pay Om Malik for the campaign, he did it because he believed that it was good for his readers. And his readers responded incredibly well.

Before last week, FON had around 9000 FONspots in the States. This was the result of one year of work (FON’s one year anniversary is tomorrow). Now with the Om La Fonera giveaway, we did 8424 La Foneras. Assuming that some don’t get connected, let’s say that next week we will be at 17K FONspots in the States — in other words, 10K short of our goal of Fonero density of 1 in 10K (USA has 270 million people). So in the States we still have another Fonero Promise campaign to run and we will have news on this soon.

In other countries Fonero Promise campaigns have ended as we already have densities of over 1 in 10K in Japan, Korea, Hong Kong, Taiwan, Germany, Spain, France, Italy, Denmark, Finland, Sweden and many other countries in which we now sell the La Foneras via etail and retail. And then in the States we are working on convincing Netgear, Linksys and other router makers to make their own FON ready routers so we will not need to subsidize the La Foneras anymore.

And lastly we are in conversations with telcos to adopt the FON standards as many telcos outside the States have done. Telcos love FON because it stops leeching (WiFi routers are sold open but the La Foneras only allow sharing between those who already pay for broadband), it is easier for telcos to sell broadband if people pay at home and roam the world for free, and churn goes down (main reason for churn is travel but if you disconnect from broabdand because you travel you lose your roaming priviledges with FON).