By Mari Silbey
Posting in Cities
Two companies, Fon and KeyWiFi, are breaking new ground this week with Wi-Fi sharing services.
Sometimes it’s just not easy to get a Wi-Fi connection, which is why two companies making news this week see a business model in helping users pool their wireless resources.
Wi-Fi network provider Fon has been around since 2005, and founder Martin Varsavsky announced today that his company now has more than five million hotspots established worldwide. These aren’t just any hotspots either. Every Fon member, called a Fonero, agrees to share his or her own Internet connection in exchange for Wi-Fi access at user hotspots around the globe. In other words, when you sign up with Fon, you become part of a network of hotspots, with free access to all of them.
The availability of hotspots from Fon varies by region, but in passing the five million mark, the company has achieved something of a critical mass. In addition, Fon has partnered with a number of telecom companies (although none in the U.S.) to help speed future growth. Regular users need to buy a specific Fonera router to join the network, but subscribers with Internet service from companies like Belgacom and BT already have compatible equipment and can join the Fon community for free.
KeyWiFi, meanwhile, is a start-up wireless company with a slightly different focus. Founder Adam Black wants to put idle bandwidth to good use and share Wi-Fi access with consumers who might otherwise not be able to afford a monthly Internet subscription. His theory is that some users don’t need all of the Internet bandwidth they get and would be happy to sell off the excess at a cheap rate. According to reporter Alex Goldmark, Black believes there is opportunity in bandwidth sharing in the same way Airbnb has created a market for peer-to-peer room rentals. He also wants to provide a public service, and has already started a pilot program with a public housing community in New York to offer more affordable broadband through Wi-Fi sharing.
The concept of spreading Internet connections around is a good one, but there are limitations. As GigaOM reporter Stacey Higginbotham points out, broadband quality and bandwidth caps can put a damper on Wi-Fi sharing. For both FON and KeyWiFi, the key to success is likely in targeting the right customer areas. These are areas where bandwidth is plentiful, demand is high, and there exists a population of users who want to defray the cost of rising Internet subscription fees. In the U.S. Verizon FiOS markets, and a certain Google community in Kansas City would fit the bill nicely.
Feb 22, 2012
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In the US, most ISPs (I use Comcast, which is among them) specifically prohibit sharing of your bandwidth with strangers in their user contracts. Thus they can terminate your service at any time if they determine that you are reselling your bandwidth or just letting others use it for free (businesses hosting open wifi access points have to buy their service under a different, more expensive business contract which allows this). If someone is detected downloading child porn or even just downloading illegal movies from your open access point, you will have a very hard time proving that it is not you. Prosecutors, for example, will say that you opened up a public access site just to hide your illegal activities. At the very least, your home will be searched and your computing equipment seized. People who host Tor exit nodes (an anonymizing protocol which shares your bandwidth with strangers) have had all kinds of similar problems with ISPs and legal authorities. People who host open access points and Tor exit nodes usually have the best of intentions. Unfortunately, our legal system does not assume that level of good intentions. A few years ago I used to host a fon open access point. Aside from the legal issues, the router hardware was a bit behind other routers (e.g., no gigabit ports), and the software didn't have many of the features of comparable routers. The situation may be better now, but fon just isn't as well financed as Cisco or D-Link and can't update its hardware and software as often.
If these catch on as many hope they will, the inevitable result would be that more traditional broadband subscribers would eventually cancel their service to join these supposedly cheaper services, while at the same time increasing usage of the overall network. Then what happens? The days of "unlimited" broadband access will be over, which will kill these services themselves since nobody is going to want to pay for other people's data usage. The parasite will eventually kill its host.
Thank you so much for the recognition. The comparison with Fon (over 5 millioh hotspots) is apt but incomplete. Our model gets its strength from community participation: members contribute their wifi to build the fabric, and subscription fees are shared back to the contributors according to how much they contribute. This model means Keywifi is suited not only to high-density urban environments (like you say in the article) but also to [b]underserved[/b] neighborhoods where many residents struggle to pay the high cost of access, and pass the credit checks that many ISPs require. KeyWifi is an early stage New York-based startup. Your readers may be interested to know how to get involved with our crowdfunding campaign on Indiegogo: http://bit.ly/ilovekw1 thanks again! - Tom Hughes, KeyWifi co-founder
Thank you for this thoughtful comment, there is a lot of un-informed fear-mongering about the issues raised by internet use (see SOPA) and it is a nice change to hear a thoughtful set of questions. We certainly agree that American law is not as clear-cut or innovation-friendly as it should be! Although we think our model is more competitive economically, we take our hats off to the hardworking people at Fon for entering this market early and successfully. Although we sometimes get this question, it clearly doesn't keep them from growing the business massively; nor does it stop millions of other everyday wifi-sharing use cases (Starbucks, public libraries, and on and on). Incidentally, because the KeyWifi model is totally transparent, the hotspot owners know who is logging on to their router; they can set the hours of access and also block specific signons (or, conversely, block everyone *except* specific members). So this isn't a scenario where you are sharing wifi with strangers, it's much more like carpooling. (Fon as I understand it has a more traditional top-down telecom model, not a community-driven model like KeyWifi.) Lastly, your point about routers is a good one, and a point of differentiation for Keywifi. The Fon solution requires a Fon router, whereas the KeyWifi solution uses the customer's own equipment, with a configuration change to use the highest level of encryption (if you're curious: it is "WPA2 enterprise" -- KeyWifi being the 'enterprise' in this context). So, customers are free to upgrade their routers (they all support WPA2 enterprise) as they see fit and at their convenience.
Our expectation is that, far from killing unlimited-use subscription models, this development will save them, because it will tend to smooth out usage during the day. Most (almost all) consumer and small-business wifi usage is very lumpy (I'm at work, so my FIOS connection at home is totally unused; when the office is empty, the T-1s go dark). This means that customers are buying service they are not using, but it also means that ISPs can't invest as much as they would otherwise -- in the end, investment is driven by utilization, because only utilization is monetizable. These developments -- I'm including KeyWifi and our competitors -- will tend to discover off-hours users. In my case, my neighbor works from home and we should probably share our bandwidth; over time, if that replicates, Verizon will get more usage from its investment and greater profitability -- higher utilization of a sunk cost. That's good for them and will probably make high-upfront-cost services like FIOS more profitable to deploy. While we at KeyWifi are not free-market utopians, we do expect the free market to operate here, and it's very interesting to us that the internet itself, in this "collaborative consumption" scenario, is making it happen.