It began as merely an idea more than a year ago, but little by little it has been taking form, gaining support and preparing for a launch on November 14. Known as FON, it is the latest business initiative of Martin Varsavsky, the Argentine entrepreneur who wants to convert Spain into a gigantic Wi-Fi network of 580,825 square kilometers. The idea is to move from Wi-Fi-connected cities toward an entire country without cables.
Can you imagine a Wi-Fi covering an area of 580,825 square kilometers? That’s approximately the size of Spain, the fifth most populous country in the European Union, with more than 40 million people. That’s the goal of the FON movement. According to José Ignacio López Sánchez, who heads the information technology and communications research bureau of the Complutense University of Madrid, “It is another one of many Wi-Fi initiatives around the world that is designed to provide wireless communication in a format that is an alternative to the offerings of established telecom operations. City governments and neighborhoods have all been joining in this movement.” Its rationale is founded on the growth of wireless in Spain in recent months.
Last September, 117,096 new broadband lines were put in place in Spain, according to the Internauta Association [which brings together Internet users in that country.] This brings the grand total of installed DSL and cable lines in Spain up to a total of 4,447,215. Under this umbrella of broadband, which is largely located in urban areas, FON hopes to generate a Wi-Fi network that is open to thousands of people. “The initiative is exceptionally brilliant,” says Enrique Dans, a professor of information systems in the Instituto de Empresa. “The plan takes account of the fact that broadband has gone from an economy of scarcity to an economy of abundance. Taking an approach that uses the idle capacity in a more efficient way is, once you look into it, obvious. However, pulling this off requires great skill. Almost five million users have broadband in their homes, and they use only from 3% to 5% of the capacity that is available.”
How, When and Why? The keys to FON
FON, the new telecom operator, hopes to use excess broadband in private and corporate Wi-FI networks to provide mobile telephone and Internet services. This network would be composed of the networks of all users, which would function under the umbrella of FON. In an exclusive interview, Varsavsky explained the keys to the launch. “We still don’t have any partner because we are launching this with our own systems, as we have told the public, but we have more than 1,400 people on our waiting list, and we calculate that we need 30,000 to cover all of Spain.” Varsavsky is the man who founded Internet service provider Ya.com, Spanish telecom service provider Jazztel, and Educ.ar, an educational project in Argentina.
Private Wi-Fi networks (in which customers pay a telecom service provider such as Telefónica, Wanadoo and Jazztel) will become a connection point with FON so that they can be used by other members of FON and by other customers who pay for access. In turn, says the company, users can opt to use the network at no cost in other access nodes, and receive half the revenues that the network generates at its connection point (known as a “hotspot.”) How does this work? People who want to share their connection must have a Wi-Fi compatible modem and FON software. They can limit themselves to offering up to 50% of the bandwidth of their connection in return for being able to use the FON network at no cost for Internet access or telephone calls, which will not be free but will be competitively priced, say FON officials.
“This is not going to be an extremely profitable plan, but neither is it going to be an NGO [non-profit organization],” adds Dans. “In the not too distant future, the air in cities will be crammed with Hertzian waves carrying IP packets, whether they are for Internet access or for voice-over-IP. And FON will be one of the options available.” Varsavsky told El Pais, the Spanish daily, that this service could interest the millions of foreign tourists who visit Spain. FON also hopes to market the cell phones that can connect to FON and ADSL to people who still don’t have any connections. This project has generated its own unique jargon during the launch campaign, via the personal blog of Varsavsky and his company’s web site. Members and customers who participate in the project are called “foneros.” “Linus,” a word derived from the Linux open-source software, is the term for those people who share their connection and use the connections of others without receiving any money in return. In contrast, “bills” (derived from “Bill Gates”) refers to those people who try to make money by providing a portion of the bandwidth of their connection in return for financial compensation. Finally, there are the “gringos,” the term for those people who will pay to use the network. They will be underwriting the platform, paying both to the “bills” and to FON itself.
López Sánchez stresses that “this looks fine as a philosophy, but it is not very realistic either from an economic or legal point of view. Beyond those considerations, there is also a scarcity of mobile terminals that have Wi-Fi capacity. These days, it is mostly the latest-generation laptops and some PDAs [that have Wi-Fi]. As for the notion that this will applied on a massive scale at a mid-range price terminals (150 to 200 euros, or $180 to $240), that will take quite a long time.”
At the Doors of the Regulators
One of the main obstacles to launching this network is the question of how well it will be received by government authorities and telecom service provider. López Sánchez believes that it will hard for this project to advance. “First of all, there will be the legal obstacles. A service of this sort would imply that each user who is connected and is giving away a part of his bandwidth is providing a telecommunication services. That means that, given legislation in this area in Spain, each user would need a license.” Nevertheless, Varsavsky said that he does not expect to face any obstacles from the CMT, the commission that regulates the telecommunications market in Spain. “The subject has already been cleared up. It is the ISPs who can either permit or not permit FON to operate. Jazztel, a Spanish ISP, is going to permit it. If the others don’t follow along with Jazztel, they are going to provide an enormous gift to it because the ‘foneros’ will go with Jazztel,” says Varsavsky.
“The second problem, López Sánchez adds, “is the very high critical mass required in order to guarantee that there is an adequate level of service. The way things are in Spain these days, it looks like it will be hard to win over a sufficiently large group of users to sign up for this service, except for most true believers. Those people who have paid for their bandwidth want to connect with the Internet, and they don’t want to give away their bandwidth to others. I believe that this movement has been promoted by a very small group of people, and they will have hard time forming a network that has adequate coverage. Likewise, it’s a complex thing, trying to charge for giving your bandwidth, and it means setting up payment arrangements that would be very hard to achieve.”
Juan Freire, a professor at the University of Coruña, believes that the FON phenomenon faces all sorts of dangers, challenges and other factors that stand in the way of its success. However, he does not believe that FON will disappear, and he is moderately optimistic about its initial stages. “They can put legal roadblocks in the way of the project that prevent its users from sharing bandwidth. However, users will always have the option to change their access (largely DSL) to FON, and continue sharing and/or selling access to their bandwidth. In addition, it seems that some providers accept the challenge of FON, and will permit people to share bandwidth. In any case, the moves that traditional telecom providers can make against FON will slow down the implementation of FON and theoretically do it harm. But given the most best-case scenario, it will be very hard to prevent it from developing,” says Freire.
Dans believes that even thinking that the CMT would stand in the way of this service would be “to admit that, in a civilized country, regulatory agencies would decide to play a role that is harmful to its citizens and favors telecom providers.” Dans argues also that the telecom companies themselves may be interested “in the value proposition that is implicit when a user pays for a DSL connect with a Wi-Fi connection; instead of providing service only at home, this provides him with access everywhere in the city. There can be some reluctance from the cellular phone companies, but they cannot do anything about it because it is perfectly legal to use a Wi-Fi terminal to transmit voice-over-IP,” he concludes.
Toward a Network of Networks
In the United States, Google is experimenting in several cities with the possibility of facilitating wireless access to the Net. In the U.S. and elsewhere, there are more and more establishments (such as McDonald’s, Starbuck’s, airports and hotels) that offer this kind of service, while also providing extremely complete maps of connection points to the Net. These are just some examples of the other ways in which the Wi-Fi movement is emerging around the world. “Clearly, cell phone companies will fight against this, but the CMT under this government (of the Socialist Party) is much more pro-consumer than it was under the Popular Party (the Christian Democrats who ruled Spain before the Socialists took over). So the CMT will not come out and stop the progress of FON,” writes Varsavsky in his own blog.
It will take time to assess the possibilities of a network that anyone can access anywhere, whether he is in the street, in a restaurant, at a sport stadium, in the park or in the car. Wi-Fi is the very essence of the mobile life. According to Freire, “This business model will become a dominant trend in the medium-term future. It is another question whether it will be FON by itself or in alliance with other companies (collaborators and competitors), or whether it will be new players who impose this model on the market in the future. Initially, the success of FON is going to depend on its ability to achieve a minimal critical mass that will enable it to have a real impact on the market for access to broad band, and at least a minimal visibility [in the market]. In this sense, the ‘viral marketing’ strategy (which proponents do not even see as a form of marketing) is the most appropriate approach.” Will FON create a revolution? Will it convert Spain into a country where Wi-Fi waves fill the air as freely as radio waves? Only time will tell.