Niklas Zennstrom has twice co-founded companies that formed powerful industries by giving away important things to consumers. Skype is shaking the telecom industry with free phone calls, and before that Kazaa. So look out for a wireless Internet startup Zennstrom is helping to run called FON, which could upend both the Internet and the mobile-phone industries.
FON is building an international network of free Wi-Fi by enticing people with home Wi-Fi service to share access with fellow 'foneros' when anyone in the FON club is within range.
"I'm a great believer in sharing resources to create a virtual-access network," says Zennstrom, an active board member. FON's CEO, 46-year-old serial entrepreneur Martin Varsavsky, shares that vision. "We are a user-generated infrastructure," he says, "not telco-generated."
After launching last November and receiving a USD 21.7 million infusion from Zennstrom, Skype, Google, venture capitalists and others, FON has signed up about 65,000 people in Europe, the US, and Asia.
So how will a free network make money? Just as Skype seeded the market with freebies and later added revenue generators, FON put a revenue stream into place only in June. It began enlisting venues like coffeeshops to provide FON-branded Wi-Fi service to paying customers. (Foneros get service free anywhere it's available.)
FON tries to distinguish itself from other commercial hot-spot operators on price. It charges as little as €2 a day in Europe, compared with a typical fee of €5 for a half-hour at competitors' sites.
"The killer applications will be voice and games, and close to that will be music," says Varsavsky. In other words, he's betting that people will use Wi-Fi to make phone calls, play Quake and fetch Coldplay songs.
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