The Spanish firm FON is offering wireless routers, either a Linksys WRT54GL or a Buffalo WHRG54S, for $5/5euros to those willing to share their bandwidth to registered FON users. Registered FON users, or FONeros as they are called, can sign on to other FON hotspots for 3 euros/day. Those FONeros making their bandwidth available for free to other FONeros can surf for free on FON hotspots. According to the FON website, those FONeros who create hotspots that charge can share in the revenue generated by the hotspot.

FON’s business model is worth looking at. Fon, headed by the Argentinian Martin Varvarsky, aspires to create the largest network of hotspots in the world. The plan relies on Internet Service Providers to partner with FON by allowing FONeros to share internet access, which could be tricky, particularly in the US, and by making FON routers available through their websites.
You can imagine why ISPs might balk at allowing users to share their bandwidth. Still, it’s possible that FON might get ISPs, probably smaller ones, to agree to this because they would share the revenue of those buying access. Yet, FON probably needs the latter half of the aforementioned partnership with the ISPs the most in order to increase the marketing of their services to make people comfortable and interested in their product.

But, and this is a big but. There are two major information technology players that have invested in FON: Google and Skype. Now, as we all know there have been rumors aplenty over the past year or two about Google wanting to become an ISP. And Skype offers internet-based phone services. Imagine, then if FON really got going and this service picked off the ground.

Ahh you say, but what about those ISPs having the last mile to people’s houses and forbidding people to share their access? Well, that’s forgetting one other trend. MIMO! MIMO*, Multiple Input Multiple Output, technology improves data rates and extends the range of wireless communications. The technology is useful radio communications, not only WiFi, but also in cell phones, etc.

Now, FON is currently giving out Wireless-G routers. Imagine if they were giving out MIMO routers. All of a sudden, it would take fewer routers to cover the same area. And if FON or some other company hooked up cell phone towers using MIMO technology, they wouldn’t have to use as many towers, because of the improved coverage and they would be offering better data rates than present services.

And if this company were FON, they might be able to tap into their relationships with Google to tap into that unused fiber and market their services and Skype for cell phones (and plans) that switched automatically from CDMA or GSM standards to VoIP.

Then, the ISP becomes irrelevant, almost. It would be just like cutting out the middle man. And lots of money has been made doing just that.

*Check out John Dvorak’s opinion.