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The Great Router Giveaway

In an ambitious attempt to "change the economics of WiFi," Spanish start-up Fon says it will provide 1 million wireless routers to users who agree to share their wireless connection, for a nominal charge of $5 per router.

FON general manager for North America Juergen Urbanski previewed this audacious marketing plan at Supernova last week, saying that "The future we see is where WiFi access is ubiquitous and accessible."

FON plans to make money off this scheme by charging a few bucks a day for the users who use those shared connections: Access via the billing system, which went live today, costs $3 buck a day or $2 for a five-day package. As for the "Foneros," as FON calls the on-the-fly hotspot providers, they get compensation in one of two forms: free roaming on any FON hotspot worldwide or 50 percent of the proceeds. The former director of marketing at data storage maker NetApp Inc. (Nasdaq: NTAP), Urbanski says FON will have 150,000 hotspots live by year-end, and 1 million by the end of 2007.

Tracking and billing these impromptu networks sounds like a logistical nightmare (for-fee users can pay either by credit card or via PayPal), but Urbanski says that the automated nature of the system will keep hands-on requirements to a minimum.

There's also the small matter of the carriers on whose networks FON will piggyback. Most wireless agreements contain clauses that bar users from reselling or even sharing their connection. Rather wistfully, Urbanski says "Foneros" will expand the market for Wi-Fi by providing customers with a mobile connection, making them more loyal subscribers at home.

FON has already signed revenue-sharing agreements with several Euro-carriers, including Neuftelecom in France and Spain's Jazztel, and Urbanski claims the company has been approached by big carriers in the U.S. "FON's philosophy is to work with the ISPs, not against them."

The likes of Sprint Corp. (NYSE: S) and T-Mobile US Inc. may be less willing to see their bandwidth carved up by freeloading Foneros. But FON, which casts itself as a "movement" rather than a conventional business, does have the potential to spread WiFi in nontraditional and "viral" ways --rather like the early growth of the Internet itself.

— Richard Martin, Senior Editor, Unstrung

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