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The Five Stages of a Fon e-Movement

October 22, 2008

Preface: So the reader understands, the following is a summary of changes in direction which Fon has gone through since conception. This is not a parody nor wish-list. You may not have been aware of some of these former lives of Fon, but you can verify everything with your favorite search engine.

Stage 1) Distribute free Fon hotspot-for-VOIP-handset software, and build a community of volunteers who will run it on dedicated PCs, so that the public can save money on voice calls wherever such a (ad-hoc) Fon hotspot can be found. These are comparable to today’s femtocells, only they use wifi instead of rebroadcasting cellular frequencies, and are comparable to Fon’s experimental “FonSpot” software which is based on Linux. Fon to openly challenge monopolistic telco companies by selling cheaper services. Fon to profit by reselling Internet bandwidth donated by the volunteers.

Stage 2) Stage 1 plan fails to attract enough press or jump certain legal obstacles. Fon disavows it’s original plans, and remarkets the company as a community of volunteers who run Fon hotspots for PCs, with emphasis on the fairly obligatory “free roaming” feature offered to members. Changes the pronunciation of the company from “phone” to “fawn” and claim that they are named after the North African Fon Ethnic tribe. 😯 Ad-hoc-wifi PC software is dropped, and Fon is retooled as router firmware for popular wifi routers. Distribute free router firmware, and sell a supply of Linksys routers pre-flashed to get things moving. Official Launch of Fon as a Revolution, a Network, and a Community. The populist, community friendly facade permits Fon to attract fans and gloss over shortcomings in their membership terms and business plan. Most adoption takes place among techie hobbyists. The Press applauds.

Stage 3) Stage 2 plan fails to establish sustainable market for wifi sales, and Fon never explores whether it is their terms, their price point, or their chosen market which is at fault. Linksys routers ran out of stock. Product partnerships failed due to Fon’s exaggerated promises, creative alternate definitions and numerous unmentioned conditions. Member churn is high, because the Fon program does not keep their interest* long enough, and the routers are very easy to improve with better firmware (designed by an disgruntled ex-Fon developer). Fon invests literally no resources on the “revolution” or “community” aspects of their network, unless it makes a good soundbyte for the press. After an extended period of inactivity, during which the Fonero Community nearly completely dies away, Fon begins replacing the old open-source routers with a proprietary one. In key areas, a supply of those routers is given away or sold at cost, to encourage rapid growth of the Network. Most adoption now takes place among newbies, people who need a cheap wifi solution but did not read the fine print, and others who are far less likely to be dedicated to something because they weren’t asked to really invest in it. The Press applauds loudly. Fon now to profit from router sales, and by inflating the value of the company for eventual resale.

Stage 4) Stage 3 plan fails to generate sufficient nor permanent network growth. Proprietary routers prove to be hackable, but most owners simply discard them now when they lose interest*. Fonero Community, which Fon has failed to establish a relationship with, and has little influence over, is reaching out to The Press independantly. Foneros have studied and analyzed Fon’s TOS now, and are growing increasingly unhappy. Fon focuses on profitable router sales, and actively conceals statistics which reveal real growth, churn, and actual service availability. Fon diverts resources to non-wifi related gimmicks and side projects, neglecting the usage complaints and bug reports from the members. Fon to perhaps profit from side projects, when they become independant companies, by bleeding Fon for research & development resources, thus saving them expenses.

Stage 5) Fon forges “partnerships” with other wifi networks by granting “free roaming” for their members, to the whole network of Fon hotspots. These roaming agreements are typically one-way, free only for the partners, and the rest are subject to many conditions for the Fon members. “Partner” hotspots are quickly added to Fon’s census to suggest rapid and healthy growth. Everything is marketed as “good for Fon”, as it is suggested that members of the public are more likely to purchase a Fon router of their own if they are aware of the Fon concept. Emphasis is placed on “network growth”, but this is measured primarily by router purchases now. Fon claims to operate openly, but has never revealed statistics on day pass transactions, repeat sales, or membership churn. Fon continues to profit up-front from router sales, and continue to craft clever statistics to make the company seem more healthy. Fon still reports no churn, and the available figures strongly suggest that they are deliberately ignoring it. Fon CEO and Fon PR contradict each other’s growth statistics, but both suggest that Fon will cease operating at a loss by the end of 2009. Fon to profit if there is a buyer after that point?

Fon claims to have gained it’s one millionth “member”, using a brand new definition of such, and stretching that to a rather wide interpretation. Only a small handful of blogs reported this event. The Press at large ignored it.

*Foneros lose interest for various reasons, including: attracting too few customers, being unable to find hotspots to roam onto, unanswered questions about Fon’s legality, doubts about Fon’s security, objections to Fon’s membership and profitsharing conditions, incompatability with Fon’s router hardware/firmware, other hardware failures, discovering that they were unable to expand an existing LAN on a budget as hoped, or other reasons which Fon did not live up to their expectations.

I have left out a few twists and turns, because they either didn’t last very long, or didn’t result in signifigant change in Fon’s growth, method of operation, or culture. It would be an interesting excercise to draw up an academic timeline of Fon events and announcements, with references, and emphasis on points of contradiction. As for La Fonera 2 and Fonosferatu; we shall see. At the moment, I fear that they are just time-killers to make the company look lively until it recovers or gets sold. Fon has time on it’s hands now, and has those expensive La Fonera+’s to unload. The Linksys are gone, the La Fonera 1.x are probably running low, and there are only 1000 La Fonera 2’s. Fon is still relatively idle. Even their directors and developers are starting to wander into the message board now, looking for amusement.

So in a nutshell, Fon has clearly been sailing for a long time without anyone with a firm grip at the helm. The exaggerations and eroding credibility began quite early on. Fon has lost passengers and officers at every port, and Fon’s final destination changed frequently, with little regard for the remaining passengers. Fon hopes to pay for the cruise by selling the passenger’s belongings, and eventually the ship. 🙁

Interestingly, Fon CEO Martin Varsavsky has begun to carefully admit that Fon isn’t doing so well these days. He’s blaming it on the pending economic collapse, of course. However, we know that Fon has been showing signs of floundering and rebooting for a long time now. The layoffs Martin frequently mentions in the present-tense actually happened months ago. If the economy was strong, Fon would be doing just as bad, but still pretending things were rosy.

BT Halves Wifi Price, Fon Doubles Wifi Price.

October 15, 2008

Coming hot on the heels of Martin Varsavsky’s regretful announcement, that Fon Wifi will soon be doubled from $/€2 per day to $/€4 per day (he needs to visit fon.com more often. It’s actually $/€3 per day now), is this news that BT is cutting the price of wifi at their hotspots by as much as 50%!!!

The new service tiers are called “BT Original”, “BT Openzone Together”, and “BT Openzone Global”. All three tiers provide access to BT Openzone, BT FON and BT Business Total Broadband hotspots. BT Original provides 500 minutes of access, while Together and Global provide “unlimited” access plus 500 minutes of “UK roaming”. BT Global also includes 500 minutes of “international roaming” at other BT partner hotspots like Swisscom Hospitality Services and Comfone’s WeRoam.

If you exceed your 500 minutes in a limited access category, you’ll be billed 10p ($.17) per minute anywhere.

Here are the respective prices for comparison:

Fon Wireless Ltd: €71.02/mo ($91.24) on average at current price
BT Original: €5/mo+VAT ($8.71)
BT Openzone Together: €12.50/mo+VAT ($21.77)
BT Openzone Global: €28/mo+VAT ($48.77)
BT Openzone per Minute: 15p/min+VAT (down from 20p) ($.26)

How prices work out per day including 17.5% UK VAT:

Fon: €2.34 ($3),
BT Original: €.23 ($.40),
Together: €.49 ($.86),
Global: €1.09 ($1.90),
Openzone per Minute: €216.00 ($376.23).
As I reported before, T-Mobile is €.67-€2.00 per day, depending on service plan.

While I can see why residents of England might pay Fon’s current price over the price of BT Openzone per Minute, I do not think they would consider Fon to be competitive against the other BT tiers – also available at BT Fon hotspots – even though Fon includes “worldwide roaming”.

The burning question on my mind is: who would prefer Fon over ANY wifi provider when Fon doubles their price in coming weeks? Will Fon continue to partner with BT when BT Openzone is allready undercutting Fon’s rates at their own hotspots? Will BT continue to partner with Fon after ending their relationship with The Cloud?