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September 27, 2006

A Worldwide Network Built on People Power
By TIM GNATEK

ALTHOUGH he runs his own business, Olaf Kreitz is a socialist when it comes to Internet connections. In the window of Braintransfer, his Internet consulting company in Manhattan, Mr. Kreitz has mounted a special wireless router from Fon, a start-up company based in Spain that is trying to build a hot-spot network around the world. He hopes passers-by will make free use of his extra bandwidth.

Mr. Kreitz gets something in return for his largess: as part of a Wi-Fi sharing community being developed by Fon, he can log on free to other members’ wireless broadband connections in a growing network of citizen-powered hot spots.

“I love the idea, sharing your Wi-Fi and being able to surf the Internet wherever you find a hot spot,” he said.

Six months after he joined the Fon community, Mr. Kreitz remains optimistic, despite having had some difficulties logging on to nearby Fon access points, and the fact that his own location had been mismarked on Fon’s hot spot location map (recently updated to show active hot spots and to help users correct errors). He said he thought the company would struggle for some time to solve such network troubles.

“It’s going to be difficult,” said Mr. Kreitz, who writes a personal Web log, www.fontas tic.org, that tracks matters related to Fon and its members, called Foneros.

His mix of optimism and caution will sound familiar to many Fon users, many of whom like being part of a citizen-powered network but have been frustrated by glitches, outdated hot-spot maps and incompatibility among portable wireless devices, to name just a few troubles.

Fon drew some press attention in February when it announced that it would receive $21.7 million in venture financing from investors like Google, Sequoia Capital and Index Ventures to develop a global network of one million Wi-Fi hot spots.

With thousands of people joining each month, Fon’s populist underpinnings are emerging as both a big advantage and its greatest challenge. Though the anarchic nature of Fon’s wireless network has benefits, like its speedy growth and use of existing broadband infrastructure, it has found it difficult to ensure that its members’ unregulated wireless hot spots are not turned on or off, or disconnected entirely, on a whim.

Though more than 85,000 people have registered on the company’s Web site to join the network, and thousands have installed Fon-enabled wireless routers in cities like New York, Berlin, Madrid and Singapore, service remains spotty in many locations.

After using the network for two months, Jan Engelke, a member from Berlin, never managed to log on to another member’s connection. He is unsure of any outside activity on his own router, as Fon’s router firmware prohibits users who share from monitoring incoming traffic. “When you look at the Fon map of Berlin, there are access points everywhere,” Mr. Engelke said. “But until this date, I have never been able to access a single Fon access point.”

So far, Fon has relied on a sense of community and purpose among its members, as well as incentives, like the offer of a $5 wireless router and modest revenue-sharing arrangements, to attract participants. But there have not been enough of them to achieve reliable coverage in urban centers, particularly in commercial zones where there is likely to be the greatest demand for “drop by” Internet access.

To help reach critical mass in Manhattan, the company began a targeted membership drive in the city in July. Fon has offered to give away 25,000 routers to city residents, giving preference to people with street-facing apartments. Over the summer, 125 free Fon routers were distributed to residents of the East Village, which now has nearly complete Fon wireless coverage.

Overseeing the distribution of the Fon routers is Andrew Rasiej, the Johnny Appleseed of Fon’s New York program. Mr. Rasiej, a proponent of city-run wireless programs, is a Manhattan entrepreneur who made widespread Internet connectivity the issue of his campaign last year for the office of public advocate, a bid that he lost.

“I estimated it would cost $80 million to build a Wi-Fi network in the city, and spent my campaign trying to convince people it was a drop in the bucket,” he said. “Had I known about Fon, it would have been a quarter of that.”

Mr. Rasiej says the Fon network could reduce New York’s cost to deploy a public Wi-Fi system because it could eliminate overlap with existing services. “A city could save money by leveraging the networks already distributed through the homes,” Mr. Rasiej said. “Then a city only has to worry about putting nodes where there is no broadband access.”

But Fon executives say they are not relying solely on public-minded citizens to build its North American network. Juergen Urbanski, Fon’s general manager for North America, said the company hoped to attract businesses like restaurants and cafes as partners, to help propagate its network.

“We’re saying, let’s not spend billions in infrastructure; let’s illustrate what’s available today,” he said. “The problem isn’t coverage — it’s access.”

Mr. Urbanski has also been wooing Internet service providers, selling them on the idea that the Fon network can help them attract residential broadband subscribers. “Fon can be an onramp in terms of new customer acquisition,” he said.

That argument has met resistance from providers like Verizon, AT&T and Time Warner, who view Fon members as breaching their end-user agreements by sharing broadband service outside the home.

“If they do share outside their building, that amounts to theft,” said Maureen Huff, a spokeswoman for Time Warner’s Road Runner service. “This is like running a cable line out your window.”

Even if the service-provider conflict can be resolved, there are questions about whether the Fon network can compete with other developing services.

Sascha Meinrath, a community wireless advocate and co-founder of the Champaign-Urbana Community Wireless Network in Illinois, which builds and promotes low-cost networks, said Fon was likely to have problems attracting interest in — and maintaining — what he said was outdated technology.

“Fon is providing the last-generation technology, and they’re coming to the game very late,” Mr. Meinrath said, pointing to coming localized services like ad hoc networks, which pass data from one device to another without needing a central router. A different system taking a global approach, called wide area networking, spans larger areas, and is expected to rival the range of a cellular network, alleviating the need for block-by-block networks of hot spots.

Past wireless companies like Cometa and Joltage tried to cobble together fee-based Wi-Fi hot spot services, but had problems gaining interest from operators and closed.

Less Networks, a network based in Austin, Tex., that currently concentrates hot spots in commercial zones like cafes and restaurants, has had more success. It now operates more than 100,000 hot spots in 50 cities and 6 countries.

“We discourage residential hot spots and want them in public access,” said Rich MacKinnon, the company’s chief executive. “It’s a stable list — there’s a good chance the Wi-Fi is going to be there tomorrow.”

Though some issues may restrict Fon’s growth in the United States, the company may face an easier time elsewhere. There are already members in 30 countries — in fact, only about 26 percent of Foneros are in the United States, compared with more than 67 percent in Europe.

“The world is not flat when it comes time to doing business,” said Danny Rimer, a general partner at Index Ventures, a global investment firm, and a member of the Fon board. “Fon is certainly having more success in locking up I.S.P.’s in Europe.”

Mr. Rimer credits that success to European service providers’ struggling rivalry with the mobile carrier market, which is stronger in Europe than in the United States. He also attributes Fon’s success in Europe to something deeper: users who want to contribute their bandwidth.

“Europe has socialist roots,” Mr. Rimer said, “and this is a movement.”

Sigue a Martin Varsavsky en Twitter: twitter.com/martinvars

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