The fonosfera team at FON has done an incredible job and just released the first official stable release of the Fonera 2.0 firmware. The codename for this release is Tantor the Elefont. Why you may ask? Because Tantor, like an elephant, is a rock solid firmware.

This release is the first of a new generation of Foneras, one that will let users manage their relationship with the Web 2.0, but also one totally open to developers. For Foneros the Fonera 2.0 will be a special router that not only allows them to make money and roam the world for free but also to manage their storage, backup, uploading and downloading activities, thanks to a USB port and a selection of plugins developed by the community. For developers it will be a chance to program their own applications for other Foneros out there, making use of the USB port and the open programming environment.

There are already several projects started to build support for 3G modems, Bluetooth dongles, home automation modules, Jamendo (the Creative Commons music service), advanced firewall controls, Vuze (the plugin the will let you download from bittorrent to a USB pendrive while your PC is off or you’re away with your laptop), a YouTube video uploader (that will let you upload videos plugging your camera to the USB port) and many others.

This new releases adds interesting features and fixes most of the known bugs. On the fonosfera blog you’ll find more details. Here is a list of what was added.

  • New interface for developers! Yes, we changed the look and feel a bit. Guys, you’re developers, not normal users, you need some distinction, don’t you? Check the new colours, ain’t them cool? And what’s that new image in the top left corner? Just for developers ;)
  • Translations and Automatic Language Detection. A small change that helps a lot! Our firmware comes out of the box with Spanish, English, French, German, Italian and… Basque! LOL!! Sorry, I needed a small wink to my mother language ;) Want to see it in other languages? Download the translation files from the svn and do the work! We will soon list what files need translation on the fonosfera wiki.
  • Sell passes, videos etc. Older versions (this was fixed in RC1) had problems with the whitelisting of some domains and not everything was working on the public side. Thanks for your reports!
  • New services added to the firewall for WAN access: you can now add ssh and web access from WAN. Now, forward the correct port of your broadband router to your fonera 2.0 and you can have full access to it from the Internet!
  • ssh access enabled by default: this is only for developers as well. You guys can’t complain!
  • Full integration with The fonera 2.0 can now be considered a fully functional fonera! You can manage your SSID, password etc from Only the bandwidth limitation is not working but will be fixed very soon, don’t panic! Anyway, why limit how much you share? ;D
  • We made tons of bugfixes as well, but why bother you listing them? You can check them on if you are interested.
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FON has a great web application called FON Maps that lets you search for bars, restaurants and other FON Spots in your neighborhood or in the city you are visiting. FON Maps on the web are great when you can plan your trips, but many Foneros asked us about ways to access FON Maps from their mobile phones, to find the nearest FON Spot when they really need it.

Today I’m happy to announce FON Maps is now an iPhone application that lets you see on a map all the Fon Spots near you, so anytime you can quickly know where to go to enjoy free WiFi. You can get it on the AppStore.

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Steve Jobs holding a MacBook Air
Image via Wikipedia

Thank you Steve Jobs. Thank you for the iPhone. Thank you for making laptops like the MacBook Air that only work with WiFi. Thank you because since we met and you told me how interested you were in WiFi us at Fon we keep getting calls from 3G operators who are selling your iPhone and find that it is a bandwidth hog. At a meeting with Steve Nicholson of The Cloud last Friday for example I heard that the iPhone consumes 30 times more data than the average mobile handset and is alerting operators on how important it is to off load traffic to WiFi networks. The iPhone is now the best selling mobile handset in USA. AT&T reacted quickly and bought Wayport for $275 million or 27 times EBITDA, not bad for a world experiencing a global financial crisis. My sources tell me that the iPhone was the main catalyst for the purchase. It is estimated that it costs 85% less to send traffic through WiFi than through 3G. And now Boingo just bought OptiFi. At Fon we are also noticing more and more iPhone traffic. We call it iFon traffic. And it´s great for Fon.

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Image representing British Telecom as depicted...
Image via CrunchBase

MobileCrunch reports about AT&T buying Wayport, a WiFi operator with around 3k hotspots in the US, for $275 Million. Fon has 300k Fonspots. We are 100 times larger and we grow a Wayport every week (although to be fair there is probably a 10 to 1 ratio in value of the their hotspots as they are strategically located and ours are where foneros are). This move from AT&T confirms the carrier’s interest for WiFi as a way to offload traffic from their expensive 3G network. At Fon we have been arguing that mobile operators will soon realize that the economics of sending movies, video, tv, music and games do not work out for 3G networks as ideal as they are for voice and light data.

Demand for ubiquitous Internet access is growing rapidly with the proliferation of devices like iPhones, Blackberry phones, Android phones and small and inexpensive laptops like the ASUS EeePC or MSI Wind. All these devices come with built in WiFi support and surprisingly mobile operators are supporting it, since even though they make money with 3G data connections they want to keep data intensive application off their expensive mobile networks and WiFi is the best way to offer fast broadband access at a low cost. Apple and AT&T already built WiFi support into the iPhone in a way that drives or forces users to use cheap WiFi instead of expensive 3G for any data intensive application, be it music downloads, VoIP or video streaming with Youtube.

At Fon we are still losing money but losses are coming down fast from 1.2 million euros in October of 2007 to 310K euros in October of 2008 to do a month to month comparison. More and more Fon members or Foneros as we call them are enjoying the benefits of a network that is absolutely free for them for occasionally contributing 20% of their bandwidth to others. Moreover many foneros are making money with Fon selling passes to non Fon members. And Fon keeps signing up Telecom partners who see Fon as an effective tool to lower churn and lower customer acquisition costs. British Telecom is one such happy partner.

In any case as an entrepreneur in a company that is still subsidizing the Fonero movement and in times of tremendous financial upheaval it makes me happy to see that AT&T the most valuable Telco in the world has clearly seen tremendous value in WiFi and gone for Wayport. I also want to congratulate the folks at Wayport for building such a worthwhile company.

Image via Wikipedia

At Fon we are selling the Fonera 2.0 to developers who write apps but if you really believe that the expense is outside of your budget please write to me at requesting a Fonera 2.0 and what you plan to do with it and if I like the idea I will be happy send you one for free. If you already bought one and you came up with a good app we will send you a refund.

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Image representing Fon as depicted in CrunchBase

Image via CrunchBase

Last Spring we cut our burn rate at Fon. We reduced our head count from close to 100 to 60. It was painful. It was sad. But it had to be done, since then Fon has grown faster than ever. Not because the people we let go were not doing anything. Quite the contrary, they had been doing a lot. But many times, a start up is about first building a platform and then managing it. And just as it takes hundreds of people to build an office building but less to run it, it also takes less people to run a platform like Fon than it took to build it. Bottom line is that when we went from 100 people to 60 we managed to grow revenues faster than ever before and to cut losses from over 1 million euros per month to 350 thousand. We also grew to one million foneros around the world. Our revenues grew from 20K euros per week to 50K and the good news is that these sales are mostly cash into the company (Fon is like a telco without capex or opex). What we also achieved is to stretch our investor´s money into 09 and to need a very small round to break even.

Looking back, I am very pleased we did our adjustments in the Spring, because if we had had to be raising money this October we would be in serious trouble. The markets simply suck right now, and even though VCs tell you that they are in this for the long run with Google, Yahoo, Apple down over 50% and no exit horizon, believe me, either they will pass or ask for a 50% or more haircut in valuation themselves.

My advice to CEOs of start ups then it´s tough, really tough, but it is to do what we did at Fon. We cut our burn rate by 70% mainly by reducing headcount, raising revenues, raising margins, and particularily by raising margins on the sale of the foneras themselves, which we used to give away practically for free. In our case, we discovered that the free mentality of the internet was not especially good for a wireless community, as most people who got their routers for free did not connect them, while those who paid were more serious about the whole thing. Moreover, we are now about to raise the rates we charge Aliens who connect to Fon. Partly because we need the money but also again to show the value of becoming a fonero and share and never have to pay. We only charge $2 per day while other WiFi companies charge way over $10. Plus the value of our passes increases as we have more hotspots. Fon now has 10 times more hotspots around the world than our second closest rival. In the UK and Japan our coverage is especially good. With this crisis, Fon cannot think of deep pocketed investors continuing to cover high burn rates, regardless of the fact that our investors are BT, Google, eBay, Itochu, and some of the largest VCs in the world. eBay for example, announced today that they are letting go 10% of their workforce and this is probably the beginning of many job reduction programs that will happen in the next 12 months at the big companies.

I know it´s hard to tell a start up CEO to fire half of the people he or she has in the company, because in a start up environment groups are small and strong emotional bonds develop. But the way I see things, we are on to a period similar to 2001-2005 and it´s either half, or all. And maybe it´s first half and then all but it´s worth the try.

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Growth at Fon has accelerated so much that we reached one million community members and close to 300K lit routers (this is ten times more routers than T Mobile has on a worldwide basis). Yes, it is true that a lot of the growth from Fon is now coming from operator deals, especially from BTFon, but that is also great news, because Fon is proving that we can work with telecom operators. Fon is showing fixed operators that by adding our shared wifi functionality with their broadband customers they have less churn, a lower cost of customer acquisition and a higher ARPU. We are also beginning to show some wireless operators that, as laptops get smaller and phones get bigger, mobile devices become data hogs and that WiFi is a great complement to 3G. The iPhone, which even though is sold as a 3G device forces you to use WiFi to get downloads from iTunes, is another proof of concept.

Sales of routers and day passes keep growing as we reduce losses. Last year we were loosing more then a million euros per month and this “burn rate” has shrunk to around 300K per month this summer. Our goal of reaching break even by the end of 09, which seemed so distant last summer, now looks within site. And the fundamentals are with us. When we started Fon, back in 2006, 200 million WiFi chips were sold. The number of chips sold this year is expected to reach 1 billion.

And more telecom operator deals are in the pipeline. In July we started Fon in Portugal in partnership with the largest cable operator in that country called Zon. Together we created Zon@Fon to serve their 1.5 million customers plus everyone else in Portugal who would like to enter the network. Next month we will launch Fon in Russia together with Sistema, the largest fixed and mobile operator in the country, and we have 8 such deals in negotiations. Top countries for Fon are the UK, Japan and France. Japan in particular is the country where we sell the most routers. These countries are also some of the three most technologically advanced large countries in the world. To me this means that others will follow.

Regarding our employees, we now have a more international team, reflecting the fact that Spain is less than 10% of our market. I take this opportunity to congratulate the people working at Fon for the great results achieved. Even if the company is not profitable yet, our goal gets closer every day and I personally put my time, money and heart in Fon. I also want to thank our investors at BT, Google, eBay, Index and others. I also thank all Foneros around the world as without their enthusiasm Fon, the largest WiFi network in the world would not exist.

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At FON we are very proud of our growth. FON has tripled in size in the last 3 months. But while I thought this was pretty unique, I was just looking at Meneame, the Spanish Digg like site, in which I invested in, and I was super impressed with their growth. They doubled in size in the last 3 months. And other companies I invested in, like Netvibes, Wikio, Vpod, Xing, Gspace,, Technorati, Plazes, Zudeo and Joost are all growing very
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Building companies and living on both sides of the Atlantic Ocean, I have learned that there are many things that distinguish Europe and America at all levels. Here´s a random list:

-America has more murders, Europe has more suicides.

-Americans mostly love guns, Europeans mostly hate and regulate guns.

-Americans are mostly religious, Europeans are mostly non religious.

-Americans believe in equal opportunity, Europeans believe in equal outcomes.

-Europeans believe in the rule of law, Americans believe in the rule of lawyers.

-Americans believe in the individual, Europeans believe in the collective.
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Here´s a view of how Google will make Youtube disappear. Personally, I don´t agree that that will be the case. Indeed, if I had to guess I would not be surprised that Google Video will do to Youtube what Google WiFi did with FON, and that is to establish a healthy competition with an internal project and an external one which Google partly or wholly owns. And, surprisingly, the internal project may very well lose and yet not dissapear.
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