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Foneros Panic as Major Legal Loss for Fon Surfaces

Fon has been keeping their mouths shut about a legal case in Germany (DE) that they lost LAST YEAR, when the courts ruled that Fon’s resale of Internet service constitutes a breach of DE fair business practice. They’ve also lost the appeal, and the ruling was declared “provisionally enforceable”. This means that Fon can’t charge money for their services throughout DE, even while a second appeal gets under way. Fon remains noncompliant at this time.

Fon CEO Martin Varsavsky issued an unconvincing statement downplaying the seriousness of the matter in his Spanish-only blog:

There are rumors that the FON network was outlawed in Germany. This is not true. We lost a lawsuit against a small operator who does not want its customers (to be) Foneros, but we are negotiating with them to (make them) realize that, like many other operators have realized, that Fon is a good business for them.

Martin still hasn’t gotten around to posting to his German-language blog audience!

Fon issued a similar statement (plus advertisement) for David Garcia (Fon Customer Service) to relay to those concerned within the English Fon Board:

We lost a trial for unfair competition with an ISP that their legal team dosn’t want that their customers share their internet connections, but besides appealing against this rule we’re also negotiating with them to make them realize that Fon is good for their business, as it has happened with other ISPs and mobile phone companies such as BT in UK, ZON in portugal, Comstar in Russia, E-plus in Germany, Neuf in France, etc.
Those companies know that Fon is their partner and it helps them to get a better appreciation from their customers, offering them not only internet at home but at hundreds of thousands of other places.
Also, let me reassure that this ruling only affects FON as a company and not to the Foneros, be them Linus, Bills or Aliens.

These reassurances are weak, as it has been clearly said the DE courts outlawed Fon’s business practice itself, not just within the scope of a single plaintiff.

The Timeline:

  • Nov 11, 2008: FON lost the first trial, Foneros kept uninformed.
  • June 05, 2009: FON lost the second trial, judge rules “The decision is provisionally enforceable”. Foneros still kept uninformed.
  • July 07, 2009: News is broken by a German Legal Weblog Telemedicus with this article and this posting of the court ruling (links lead to English translations).

The court’s decision is that FON has to pay €200,000 due to the Security issues this causes, €25.000,00 for failure to comply by providing a list of Foneros which are customers of Plaintiff “1&1″. Due to losing the second trial, it seems these amounts are now increased to 110%. Upon FON’s second conviction, each breach requires payment of up to €250,000 – or six month’s imprisonment, and halt FON operations for that duration.

Fon proposes to Foneros and the Press, that it is appealing the second ruling, and at the same time, pursuing a “partnership” with the Plaintiff, “1&1?. It is not explained why they believe they will succeed now, when presumably, failure to “partner” resulted in the lawsuit in the first place. Nor is it clear how they can pursue an appeal without offending the Plaintiff at the same time.

What will happen to Foneros in DE, if Fon loses the right to operate there? At the least, there will be no more sales of passes to Aliens there. Free roaming will probably continue among Linuses and visiting Bills. However, a major component of the Fon System will be destroyed.

It is also unknown what effect this legal loss will have on Foneros in other countries, who may belong to ISPs which are also unwilling to passively participate. Can we depend on Fon to accurately turn Day Pass sales on and off at will, depending on the Fonero’s ISP? Will Fon update older La Fonera WiFi router’s firmwares to permit disabling sharing? – this is a feature now found in La Fonera 2.0. If Fon updates older firmware for that feature, will they consider including the software-based improvements which they have seen fit to provide only in newer hardware?

If Fon cannot resell Internet service in DE, what could they sell in that territory instead? Perhaps they will take my gift idea of using the routers to host VPN servers so they could sell privacy and security enhancement services? Foneros and Aliens worldwide would appreciate this as well!

Elfonblog thanks skynetbbs for providing translation of the lawsuit timeline.

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