Fon does not split money 50/50
May 8th, 2008For a long time, Fon has been advertising that they split the money they take from Aliens, with the Bills, “50-50″. If you have paid very close attention, Fon quietly mentioned that there may sometimes be taxes or fees, but continued advertising “50-50″ until recently. A review of their web pages shows that they are now much more forthcoming with how the system works, but they’re still refusing to say how much these “fees” are, and what they go to. The key word is “net profit”, which is an undefined subset of the “gross profit”.
A current thread in Fon’s English language discussion board, discusses the reason that Fon holds our money for so long, after we have “earned” it. Presumably, in Fon’s own interest-bearing bank account. The setup works like this: most of us have to buy our routers from Fon, for which we receive no guarantees, nor help in making it profitable. This merchandise sale is profit for Fon. Then, Fon takes the lion’s share of any money which IS made at our hotspots. Finally, Fon withholds Bill’s share until his “Piggy Bank” had exceeded a certain threshold. This threshold was just changed from $30 to $20, for which Fon may be commended.
So the biggest remaining issue is: just how much of that €/$3 fee from the Alien really is provided to our poor Bills?
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This example breakdown uses data supplied by board-poster nick123, with fees which apply there in the UK. As you can see, these “fees” which Fon trivializes to the point of hardly mentioning, and never itemizing, amount to nearly 1/3 of the whole fee! Certainly, this chart would be resized for pay splits in different markets. I’d like to know what those splits are, since Fon doesn’t publicize them. It’s Fon’s big surprise to us, when we examine our Piggy Banks.
Since so much money is being wasted on moving money, I think this shows that Fon’s “€/$3 everywhere” business plan is terminally faulty. Aliens should be given the option to buy larger chunks of online time, to minimize transaction fees. Of course, this makes the issue of billing by the minute for roaming Aliens, and paying by the minute for Bills, more desirable. Since Fon does log hotspot connections down to the second, and they can work out the figures in-house, this would not present an insurmountable complication or expense.
I’ve often written that Fon’s only real service to the Fon Network, is the convenient receiving and dispensing of money, in exchange for maintaining and providing the authentication database. That database is the only unique intellectual property that Fon has developed in the whole two years of operation. It’s convenient for individuals and businesses to seek a “hotspot in a box” solution, which comes with convenient authentication and billing. However, Fon’s profit-sharing terms are, frankly, hideous to anyone actually hoping to make money from the project. Other “hotspot in a box” providers allow much more flexible billing terms, along with firmwares or pre-flashed routers with much better feature sets. Fon sticks with “€/$3 everywhere”, not because it is the best system, but because it is Fon’s system, and they’ve become identified by it.
Fon is going to need to reorganize, or die - unless they sell the company in time. Fon should switch from taking ~%30 of the loot, to charging a fixed transaction fee to every Bill who hosts an Alien, who stays online at least long enough to cover that fee. Fon should accept larger payments from Aliens, and let them use it up by the minute. They should likewise, pay Bills by the minute. Fon should allow Bills to choose when to transfer funds out of the Piggy Bank, but should feel free to charge a reasonable service fee. If Fon wants to be a financial success, they need to stop taking divine tribute from the Fonero peasantry, and instead provide concrete plans for Foneros to help them increase their number of Alien events.
Let Fon sell their own routers, fine/whatever, but don’t allow them to lock out other equipment and firmwares. Being compatible with Coova/Chili/spot is a very easy goal to reach these days. Fon and its active community can provide development and features and scrutinize the security in homebrew hotspots. It kills me that I no longer work for a webhosting facility. I had free rack space and bandwidth there, and I would have certainly set up my own authentication server and webhost to provide exactly the services and terms which I’m describing here. I could be a thousandaire by now. 
EDIT: nick123 has offered some additional information, based on his knowledge of UK taxes and PayPal fees. His data suggests that the breakdown looks more like this:
This is damning evidence that we need to eliminate the credit card/PayPal transaction fees whenever possible, by allowing Aliens to purchase larger blocks of connect time.We need further accountability from Fon. What does that remaining unknown portion go to? What is the split in the USA? In other countries? While Fon does quietly disclose that there are “fees and taxes” involved, i’m sure that they are legally obligated to itemize them for our individual cases. It is indeed unfortunate that I must put that last sentence in such a way, for I have little faith in Fon disclosing just because it makes us happy. 
Accountablility is to politicians and businessmen, what sunlight and garlic is to a vampire.
RedBoot> exec
