Google, Skype Fund FON
[Updated with comments from Martin Varsavsky and Glenn Fleishman]. FON a wireless services company started by maverick entrepreneur Martin Varsavsky has just raised $21.7 million from Google, Skype, and Sequoia Capital. The cash infusion has been led by Index Ventures …
Context & Ripple Effects
Martin Varsavsky's FON — a Madrid-born community whose members, 'Foneros,' share their home Wi-Fi by installing FON software on their routers — has closed a $21.7 million round led by Index Ventures with Google, Skype, and Sequoia Capital participating, per the confirmed deal terms reported February 5, 2006. The pickup was unusually broad for a seed-stage wireless play: Varsavsky announced it on his own blog under the title 'A dream come true,' while the New York Times, Glenn Fleishman's Wi-Fi Networking News, Dan Gillmor, David Weinberger, and Ethan Zuckerman all weighed in within a day — Zuckerman framing shared Wi-Fi as relevant connectivity for Africa.
First-order effects
- Google and Skype have bought early positions in a consumer-built hotspot layer: FON now has the capital to scale router-software distribution, and Skype gains a potential path to put its voice service on shared Wi-Fi access points instead of only PCs.
- Broadband subscribers who become Foneros effectively turn residential connections into a distributed public-access network, putting them in direct tension with the ISPs whose terms of service govern those lines.
Second-order effects
- Incumbent carriers and ISPs are forced to decide whether to treat router-sharing as a contract violation to enforce or a partnerable footprint — a policy question FON's growth makes unavoidable.
- Other Web-platform players face pressure to respond in kind: Google's participation, coming alongside a Times of London report (unconfirmed) that it is building its own global IP network, signals that platform companies are willing to fund access-layer infrastructure rather than rent it entirely from telcos.
Third-order effects
- If the pattern holds, the edge of the network shifts from operator-owned to member-shared and platform-subsidized, with top-tier venture firms like Sequoia and Index underwriting infrastructure built out of consumers' homes rather than carrier capital budgets.
- Regulators and ISPs would then confront a structural question: whether shared residential bandwidth constitutes competitive access infrastructure or unauthorized resale, setting the rulebook for every subsequent community-network model.
The trend: Internet platform companies are moving down the stack, using venture stakes in community wireless networks to gain leverage over the last mile traditionally owned by carriers.