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FON - Crowdsourcing as a business model

The bane of the telecommunications industry is always infrastructure. Well, maybe sometimes it's the regulation board or the PUC, but mostly it's infrastructure. Capital investments in infrastructure are like fingernails on a chalkboard to the telecom CFO. If you want to create a WIFI hotspot network you have to spend money on a ridiculous number of things like:

  1. The actual physical WIFI antennas/routers/etc - and you have to make them reliable
  2. Salespeople to go out and make people install your stuff, which is why major retail space owners (Starbucks? McDonalds?) are likely targets for big deals
  3. Field technicians to go to those retail locations and actually install the stuff
  4. Field technicians to go back out when someone kicks the device and it breaks
  5. Fleet managers to track the truck rolls and do oil changes and...
  6. get the point

What if you could have a wifi network without buying or hiring any of those people? What if you just had a couple engineers who retrofit really cheap WIFI routers with your hardware/software package and then you sell them to people who already have a broadband connection? All of a sudden everybody with a DSL/Cable connection in their house becomes your Salesperson and Field Technician.

FON vs. TMobile

At least for the USA, T-Mobile hotspots go for $10/day. And there is no such thing as being able to use them for free. In contrast, "Aliens" on the FON system currently pay $3/day. Undercutting Tmobile by two thirds. Well, that's not bad.

Crowdsourcing a Telecom Company

This is what Wired was talking about in their recent "Crowdsourcing" article. It's the idea that as communication and search costs lower you can suddenly contract with everyone in the world to be a tiny little service provider in a giant company that has very little infrastructure or employees, but that does millions in transactions a day. eBay has been doing this for a few years now, but we finally have a fun title for the practice.

I do plan to write more about this in the future over the next weeks and months. I've got some fun statistics that I cooked up about FON penetration in different areas, a little bit of a wrinkle in their model, and of course I'm going to have to get a device as well. If you want to read more, it will show up on this FON post listing which has an RSS feed.

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