Taking Wi-Fi power to the people
The Spanish start-up FON wants you to help it unwire San Francisco and other cities around the globe by providing ubiquitous Wi-Fi access.
On Friday, the company will give away its Wi-Fi routers, which will allow broadband subscribers to share their Internet connections with Wi-Fi users throughout their communities. "Freedom Friday," as the company is calling the event, will kick off at noon in San Francisco's Union Square.

Citywide Wi-Fi networks, which are built and managed by a city alone or in partnership with a private company, have become popular in the last couple of years as large cities such as Philadelphia, New Orleans and San Francisco have promised ubiquitous Wi-Fi coverage within their borders.

While access to Wi-Fi itself is cheap--it doesn't require expensive radio licenses and is readily accessible by just about every laptop on the market today--building and operating these citywide networks still costs money. Philadelphia estimates it will spend $10 million to build and maintain its network over the next several years. And San Francisco said it will spend $15 million--including maintenance and upgrades--over the next decade.

In total, network providers and local governments building their own networks are expected to spend $235 million to build and operate citywide networks in 2006 alone, according to MuniWireless.com, a Web site that tracks the market. And by 2010, more than $3 billion will spent on these networks, the Web site said in a recent report.

Despite all the hype, only a handful of major cities have Wi-Fi networks up and running. San Francisco, for example, is still negotiating its contract with EarthLink and Google, which were selected to build the network. And New York City is still studying its options.

This is where FON comes in. The company, which, ironically, counts Google as one of its backers, says it has a solution that can be deployed now at very little cost to the city or its residents.

"San Francisco or any other city doesn't have to wait for new Wi-Fi networks to be built," said Joanna Rees, chairman of U.S. operations for FON. "There are 400 million Wi-Fi connections around the world. If we could get all of them to become part of the FON community and share their Wi-Fi, we would have ubiquitous coverage around the world today. And we wouldn't need to build municipal Wi-Fi networks."

FON's software allows broadband subscribers to split their Internet connection so that it offers a secure connection indoors and an open connection to people outside the home. Initially, the software could be downloaded onto existing home routers. But this proved too difficult for most people, so FON built its own, small router, called La Fonera.

The La Fonera router, which uses standard 802.11g technology, was introduced only a few weeks ago. It was designed for easy installation. Users simply plug the device into their existing broadband modem, and, voila, their broadband connection is converted into a FON access point.

Currently, about 112,000 La Fonera and FON-enabled routers have been registered with the company. To help spur adoption it's been offering the routers on its Web site for $5 apiece. It's also taking its promotion on the road, offering routers for free in cities such as San Francisco and in New York, where it's planning an East coast "Freedom" event for later this year.

Once users have registered, they become part of the FON community, which allows them free access to any FON hot spot in the world. Non-FON members can also access the network, but they must pay $1 or $2 for 24 hours of access. This small fee is actually how FON generates revenue.

FON was founded less than a year ago in Madrid, Spain, by entrepreneur Martin Varsavsky. The grassroots Wi-Fi network provider caught the attention early on of big financial backers. And in February, Google and eBay, along with the venture capital firms Sequoia Captial and Index Ventures, which had also backed Skype, invested more than $21 million in the start-up.

Despite its own municipal Wi-Fi interests, Google executives say they aren't threatened by FON's grassroots efforts.

"FON is one of a number of interesting companies working to make the Internet more available to end users, and this is a mission in which Google deeply believes," said Chris Sacca, head of special initiatives for Google. "FON's approach is very different from Google Wi-Fi, yet we support experimenting with a variety of means of making the Internet more available to end users around the world. We are friends with anyone innovating to make the Internet more widely available to end users."

While FON's concept of grassroots Wi-Fi may sound like a good idea, it's not without issues. For one, many Internet service providers, such as AT&T and Time Warner, consider the very concept a violation of their customer contracts.

"Sharing bandwidth outside of a dwelling without our consent is a violation of our terms of service," said Maureen Huff, a spokeswoman for Time Warner cable. "People need to know that sharing their broadband service amounts to theft. It's analogous to running a cable line outside your window and giving free video signals to your neighbor, which I think everyone recognizes that's wrong."

While it might be difficult for service providers to pinpoint who's using a FON router, Huff said there are ways find out if someone is illegally sharing broadband service. If illegal usage continues, Time Warner can cut off service.

But FON's Rees said the company is working to partner with several broadband providers. She said that the FON network will actually help cable operators, phone companies and other Internet service providers encourage broadband adoption. She added that FON would also offer financial incentives.

"We are working hand-in-hand with ISPs," she said. "And there are many benefits we can bring to them, such as sharing some of the revenue generated from the service fees from non-FON members."

Critics of the FON model say there are also technical hurdles to FON's network. Because Wi-Fi operates in unlicensed radio spectrum, signals can interfere with each other, degrading the performance of the network. This is a big issue for citywide Wi-Fi deployments too. But because the city or a service provider controls the network, it can re-engineer the network for maximum reliability and performance.

AT&T unveils video home-monitoring service
AT&T, said on Thursday it would start to offer a monitoring service that would let U.S. customers use cell phones or computers to receive alerts or view a real-time video feed from their home.
The telephone company said it would offer the service for $9.95 a month to broadband Internet customers around the country or to wireless Web cell phone customers of Cingular Wireless, its joint venture with BellSouth.

The service is an effort by AT&T, which is seeking regulatory approval for its plan to buy BellSouth and bring Cingular under one roof, to try and improve customer loyalty by offering integrated wireless and wired services.

Customers would also need to pay a one-time fee of $199 for a starter package that includes a camera, a wireless door or window sensor, as well as software and hardware that connects them to the home network.

The service could support up to four cameras and wireless sensors that could alert customers on everything from high or low temperatures to the presence of water or an intruder.

Customers could receive alerts either via an e-mail on their desktop or in a text message on their cell phone.

Competitors in this area include the world's second-biggest cell phone maker, Motorola, which also offers a home-monitoring system.

AT&T said the service would work on 95 percent of cell phones presently sold by Cingular, but that the service would provide better quality video downloads on a high-speed wireless network Cingular is building.

AT&T said it plans to start selling the service via its Web site and to begin offering it at Cingular stores next year.

Customers would have a user password to access the service on their computer or cell phone, according to AT&T.

The telephone company said it would not have the capability to view customers' home video feeds and promises customers it would not monitor or measure any of the data transmitted via the service.

Shares of Earthlink decreased 71 cents, or 9.4 percent, to $6.83 in morning trading on the Nasdaq Stock Market. The company's stock has traded between $6.82 and $12.21 in the past 52 weeks.

EarthLink posted a quarterly loss of $3.2 million, or 2 cents per share, compared with a profit of $36.4 million, or 27 cents per share, during the same period last year.

Analysts polled by Thomson Financial forecast a loss of 1 cent per share.

Revenue increased 4.5 percent to $331.3 million, from $317 million in the year-ago quarter. Analysts had projected revenue of $332.9 million.

EarthLink said it recorded a loss of $26.2 million related to its investment in Helio, a wireless service joint venture with South Korea's SK Telecom. That's greater than the $4.6 million loss a year ago.

In a conference call with analysts and investors Thursday, Gary Betty, EarthLink's chief executive officer, said Helio's ``early usage trends are encouraging.''

Although he would not provide specific subscriber numbers, Betty said Helio subscribers were using the rich-media-heavy service as expected.

Subscribers are moving more data -- sending instant messages, downloading video and visiting sites like News Corp.'s popular hangout MySpace -- than the mobile industry average, and bringing in a higher revenue per unit than expected, Betty said.

The company also said it increased operating and marketing expenses in the quarter to develop and market its broadband, voice and municipal Wi-Fi services, such as one in Philadelphia and a joint project with Google Inc. in San Francisco. Like other service providers that have their roots in dial-up, EarthLink has been looking for ways to broaden its business as U.S. households increasingly turn to higher-speed broadband access.

EarthLink said its revenue gain was driven by growth in broadband, advertising and other value-added services revenues, which outpaced declines in traditional narrowband service and Web-hosting revenues.

However, EarthLink gained only 47,000 net broadband customers in the quarter, while losing 81,000 net dial-up subscribers, or 8.8 percent from the year-ago period, to end the quarter at 3.3 million for dial-up.

During the conference call, the company said it will announce seven additional municipal wireless contracts this year, but acknowledged that so far, its buildout has experienced significant delays.

``We've had every imaginable delay you can think of,'' Betty said, pointing out such troubles as getting city councils to announce deals on time and getting permits and leasing towers, along with some ``self-inflicted wounds.''