BT and Fon have finally revealed a deal first disclosed by GigaOm, others in February and March 2007: Articles by Reuters and Om Malik discussed the deal in progress, along with an investment by BT in Fon. The announced deal matches what was discussed back then: 3m BT customers will be able to turn Fon service on, and BT has put in some of their pounds. Fon has been building a grassroots-style worldwide hotspot network by allowing individuals to share their broadband service to other Foneros for free and to all-comers for daily fees of about US$2/€2.
Fon quietly updated their pricing model recently, according to a spokesperson I contacted via email, which made this announcement initially confusing to me. In the past, Fon charged hotspot users based on whether they were Foneros (Linuses shared for free with other Linuses, Bills charged) or not (Aliens).
The new model allows all Foneros to roam onto all Foneros, but Aliens continue to pay on any Fonero location. Linuses are simply forgoing a share of the revenue, which is a big shift from the previous generosity-begets-generosity approach. And Bills lose the revenue split from other Foneros, but I expect that that amount must have been low for this switch to take place. BT Foneros can choose to be Bills or Linuses.
Fon and BT's job now is to market the idea of turning this service on to BT's customers. BT could use it as a customer retention tool or a way to get switchers to move to their service.
In related news, BT will allow its Total Broadband retail customers--those subscribing not just to a BT DSL line but to BT service over that line--to access 7,000 Wi-Fi hotspots and 12 city hotzones in the UK at no additional cost. That seems to me a more obvious move and a bigger win than the Fon deal initially.
Do the Time-Warner (announced April 2007) and BT deals actually mean anything in terms of building Fon's network? Sure. But as I've noted repeatedly, Fon's network is only as valuable as the best locations in it. If most Foneros are in homes in residential neighborhoods and perhaps urban highrises, those locations aren't accessible or useful to most people.
With a daily charge intended to prevent Fon from becoming a broadband replacement--unlike most hotspot networks, which have monthly plans designed to turn them into broadband replacements--there are a restricted number of uses for Fon in locations where you can't, you know, sit down or make a comfortable phone call.