FON

Fon’s continuing struggles in the US Market

I’ve remained pretty unimpressed with FON recently. Their expansion in the USA has gone in fits and starts of free giveaways that seem to result in basically no growth of their network. We can no longer see the real numbers after the inaccurate data problems they had…

However, I have kept a close eye on the statistics for certain areas and have noticed two consistent situations:

1. Growth of active hotspots in the areas I watch on the FON Maps is stagnant or declining
2. The majority of access points are still in suburban areas - the freeloading “Linus” model is more popular than the Bill

This isn’t a real surprise. Their model rewards people who live in low density zones and sign up simply to get access to free routers. The result is a low quality network. On a recent trip to upstate New York I was amazed that there were basically no routers in the towns I visited and those that existed were in the middle of nowhere. The US is a spread out land, and the availability of the Linus model just might not work here.

Fon’s deal with TimeWarner

FON has just announced in a variety of places that they received 10million euros to help them spread more routers around the world. That’s great news for them as a company and recently they’ve taken steps that I believe will make the business more sound as well.

Flaws with old FON business model

FON’s original model was to give away routers for free. This got them lots of new “subscribers” and lots of new “foneros” (people who have a router) but it didn’t necessarily grow the network very much. There were lots of posts on this topic when they originally released their maps product which allowed users to figure out that in fact, FON has a large number of “subscribers” but very few people have turned on their routers and get any real use out of them for making money for anyone. FON’s response wasn’t to justify the rate of conversion, but to disable the ability to gather those statistics. That was really dumb.

FON’s current model - downplay the Linus and Focus on the Bill

I’ve believed all along that the “Linus” model was flawed and especially flawed when combined with a free router (an old post if Linus and Bill in terms of FON are new to you). If people are not motivated to earn money from their router AND they can get that router for free then they will get a free router and never turn it on (or reflash it and turn it on). That FON should instead focus solely on the “bills” or should charge more money for their routers has always been my feeling.

I haven’t written about FON in a while. It’s still an interesting idea, but I fear that the execution of that idea is too weak to make it successful. If they succeed it will be the triumph of the idea over the execution.

But today I saw this post in Martin’s english blog which just reminded me of the major source of their problems: signups vs. conversions. FON has long been big on signups. They love to report people with an account, people who have requested a free fonera, people who have done the easy part. What they need to focus on and write about is not the signups but the conversions! How many of those people who spend $5 on shipping actually turn on their fon?

The strength of the network is in operational access points, not in the accounts or in the free routers that sit in their boxes to never be plugged in. The “Fonera Promise” is an empty promise - there is no reliable motivation for the Linus’ of the world to actually plug in their fonera and hence this remain a competition of paper tigers until FON starts focusing on the actual active access points in the world.

Based on the stories I’ve heard of Martin’s past (pump and dump of various companies) it seems more likely that FON will continue pumping up their buzz using these empty numbers about signups and then sell out to someone else before others realize the true situation: conversions are lower than signups…and in the case of FON those conversions are likely lower by a large amount.

I think I know what I’m talking about on this one, and FON is not a pyramid scam.

I’m not sure what spitzerpushingwifiinsteadof911_justice.htm”>this delusional person is talking about when they say:

FON is a wide area networking pyramid scam that is growing in Europe and trying to get into the USA. Pyramid scams are illegal in most states and I am sure Elliot Spitzer knows that. With FON you make money sharing your connection and make more affiliating and then it goes on in a pyramid scheme to increase your income based on getting more people on the network. Sound familiar?

There is nothing about FON that is a pyramid scam. Much less, there is a difference between affiliate pyramid promotional systems (which are legal) and Ponzi Schemes. Learn that difference. It’s not complex. Further, “pyramid schemes” are defined as having “no product nor service of significant value”. I use FON Routers every day. I assure you, they have value.

There are plenty of things to get upset at FON about. I’ve written about several of them. And this is not one.

In his English language blog, Martin Varsavsky mentions that “In the last 24 hours alone we placed 800 access points.” and also discusses how they have 100,000 registered Foneros and placed an order for 100k Foneras that they expect to use up by February of next year. That’s all pretty impressive stuff. Or is it?

A little while ago there was a post that caused some serious uproar and division in the FON community basically bringing to a head what has already been happening: Fonero dissatisfaction. Unfortunately, rather than respond to the claims that their UI mislead users, FON simply disabled the ability to get the statistics that had been used to determine the actual growth rate of FON access points. So, now when Martin says in his blog “we are huge and growing insanely quickly!” what evidence do we have of that growth?

Additionally, and this is where having a Spanish literate wife comes in handy, in the
last
24 hours Martin has offered FREE Foneras to three different user communities - Meneama, Bandaanchast, and people who have commented in his Blog. The pessimistic view of this is a very bad one!

The Pessimistic View of FON

This was all a calculated scheme. Martin specifically gave the free FON devices to these communities so that he could artificially increase the number of units “placed” in the last 24 hours. Notice the use of the word “placed” as opposed to “sold”. That’s kind of sketchy behavior, but I think the even worse situation is this: people who get a router for free are not committed to the project. So, of the 800 “placed” in the last 24 hours what percent will actually get turned on? What percent of the group that get turned on will still be in use 24 hours after they are turned on? How about 24 weeks down the road? PLUS - I’ve already commented on the folly of this idea in Martin’s first discussion of the point. The quality of the network is hugely important, so you don’t want to have to send people around to test the points and there are plenty of sites that will teach you how to “crack” the router so it pretends to be working even though it’s just serving up private WiFi. Free Foneras degrade the quality of the network. Bad idea. So, it’s both shady accounting and it was done in a way that yields very little long term value for FON.

I made a squidoo lens about FON.

Leave a comment and point me towards resources to add and I’ll be sure to do it.

Squidoo is basically a personal take on resources someone thinks are valuable. There’s tons more interesting information on the subject, I know it, but I’ve only found a handful of places to read.

This is a little concerning to see details of how to execute sniffing of FON username/passwords. I imagine that as a Bill it would be dangerous to lose this information because it would probably be possible to take your money from the shared revenue.

Other than that, while it’s never good to lose a username/password I’m not sure if it’s such a big deal.

The site recommends that you submit your captured file to them for decoding. The slight problem there is that now THIS site becomes a way to “sniff” usernames passwords: people test this using their own account, submit it to this site, and now this site has their logind details. Great idea.