Wi-Fi Startup Gets Funding From Google, Skype

Fon, a Spanish startup company that plans to create a global network of 1 million shared Wi-Fi hot-spots by 2010, today received $21.7 million in venture funding from Google and Skype, as well as other investors, including Index Ventures and Sequoia Capital.

The idea behind Fon, which was founded three months ago by telecom entrepreneur Martin Varsavsky, is to create a global network of users called "foneros" that will be able to connect to the Internet using Wi-Fi hot-spots provided by other foneros.

The company says it's following Skype's download-and-install model and plans to generate revenue from multitiered subscriptions. Members will fall into one of the following categories: Linus, Bill, or Alien.

Linus members have to share their home Wi-Fi hot-spots with the Fon network and can use any Fon hot-spot for free in return. Bill members share their Wi-Fi hot-spots with Alien members for a fee and can't roam the Fon network for free. Alien members have to pay to use the Fon network based on usage. Aliens are at the heart of Fon's business model, according to Fon founder and CEO Varsavsky. Half of the revenue generated from Aliens will be shared with Bill members and will help build a large Wi-Fi hot-spot network.

The Fon network will also benefit Internet service providers like Google and Skype because it will give more people around the world access to their services. Fon "is making it easy for people to access Wi-Fi anywhere. This is exactly what we had in mind as a logical next step as Skype began to proliferate across desktops worldwide," said Janus Friis, Skype's co-founder, in a statement.Google couldn't provide comments on the investment but says it's looking forward to seeing how the Fon network develops.