The future for Calypso is getting brighter and brighter:
Google and Skype are investing in a company that wants to set up a million wi-fi hot spots by 2010:
Google and Skype Join BackersOf Spain's FON Web Start-Up
By REBECCA BUCKMANStaff Reporter of THE WALL STREET JOURNALFebruary 6, 2006; Page B6
Search giant Google Inc. and Skype Technologies SA, the Internet-phone company owned by eBay Inc., are backing a Spanish Internet start-up that is trying to build a shared, global network of wireless hot spots.
FON Technology SL, based in Madrid, was formed about four months ago and has no revenue, says its founder and chief executive, European Internet entrepreneur Martin Varsavsky. But the company -- which calls its users "Foneros" and allows them to use special software to share each other's Internet connections, sometimes at no charge -- has snared $21.7 million in funding from Skype, Google and two prominent venture-capital firms, Sequoia Capital and Index Ventures, FON said. (Sequoia is based in Menlo Park, Calif., while Index Ventures -- which previously provided funding to Skype -- is based in Geneva.)
Skype founder Niklas Zennström said that "enabling more communities to tap into the power of the Web benefits us all." For its part, Google said FON's technology "will enable people to get online more often, and from more locations."
That could increase revenue for companies like Skype and Google, and possibly augment Google's plans to offer broad-based Wi-Fi. The company is planning to offer free wireless-broadband service throughout San Francisco, for example. FON, which has about 3,000 users, has a goal of setting up a million Wi-Fi Internet hot spots around the globe by 2010.
FON users -- who must have an existing home broadband connection -- can use the company's software, downloaded free from the Web, to roam at no charge on another FON user's connections when they are outside their home, as long as they agree to share their own connection with others. FON users who don't want to share have to pay for roaming, though they can also make money by charging nonusers to tap into their connections, Mr. Varsavsky said.
The company is offering its service free on a trial basis and will start charging for it over the summer.
The strategy has resemblances to that of Skype, based in Luxembourg and purchased last year by eBay for $2.5 billion. Skype lets members make some computer-based phone calls free, but charges money for some add-on services and calls made to landline or mobile phones.
Skype's business model has put pressure on traditional phone-service providers. "We believe that what Skype has done for communication, FON could potentially do for broadband," says Danny Rimer, an Index Ventures general partner.
But Joe Laszlo, analyst at Jupiter Research in New York, says FON faces some challenges -- including competition from the increasing availability of free Wi-Fi in public places like cafes. The company's service might also run afoul of the service agreements of some broadband providers, he said, which prohibit users from opening up their Internet connections to other parties.
Mr. Varsavsky says FON will share revenue with Internet-service providers when people pay for FON Wi-Fi access. FON already has a business partnership with one large Swedish Internet-service provider, the company noted.
Write to Rebecca Buckman at rebecca.buckman@wsj.com |
