In a big win for a little Wi-Fi startup called Fon, Time Warner Cable Inc. will let its home broadband customers turn their connections into public wireless hotspots, a practice shunned by most U.S. Internet service providers.
For Fon, which has forged similar agreements with ISPs across Europe, the deal will boost its credibility with U.S. consumers. For Time Warner Cable, which has 6.6 million broadband subscribers, the move could help protect the company from an exodus as free or cheap municipal wireless becomes more readily available.
Fon was founded in Spain in 1995 on the premise that people shouldn't have to pay twice — once at home, then again in a coffee shop — for Internet access. At first, the company offered software that let members, called Foneros, turn Wi-Fi routers into shared access points, but it took hours to get up and running.
In the fall of 2006, Fon, which counts Google Inc. and eBay Inc.'s Skype among its investors, started selling and sometimes giving away its own branded wireless router, called La Fonera. Since then, it has distributed about 370,000 of them worldwide.
La Fonera splits a Wi-Fi connection in two: an encrypted channel for the Fonero and a public one for neighbors or passers-by. Foneros can decide how much of their bandwidth to share with the public and can log on to any Fon router without charge. "Aliens," as Fon calls nonmembers, can register on a Web page and pay a modest $2 or $3 for 24 hours of access.
In the U.S., where it costs $10 for a day pass to use a T-Mobile HotSpot at a Starbucks, Fon's economics seem particularly appealing.
Joanna Rees, chief executive of Fon USA, said such rates at coffee shops, airports and hotels might work for a business person with an expense account but are too high for people who just want to quickly check e-mail, make a call on a Wi-Fi phone or play on a wireless video game device.
"They're extorting people," Rees said.
Starbucks Corp. and T-Mobile USA Inc. representatives responded that they provide a premium service, and that customers see value in paying for speed, security and reliability.
Fon has about 60,000 Foneros in the U.S. In February, the company launched "Fonbucks," a one-month router giveaway aimed at people who live above or next-door to a Starbucks. It was an amusing way to get more La Foneras into high-density areas, and it worked to the tune of 6,800 free routers.
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