FON, a three-month-old wireless start-up, has raised some serious venture capital from a high-profile group of investors that includes Google, Index Ventures,Skype co-founders Niklas Zennstrom and Janus Friis and Cisco senior vice-president Mike Volpi. Om Malik has all the details on the company, which has the ambitous goal of building a global WiFi network with one million hotspots by 2010. This hotspot eco-system will be created by having people download FON software so they can share their Wi-Fi connections with the public. FON members can share each other's connections for free, while non-FON members can use the service on a pay-as-you-go basis. It's somewhat like the Skype model. Skype and Google are jumping onboard, according to FON's press release because it will make their servies more widely available. At first blush, it seems like a bold strategy and that may need a bunch more VC. It's interesting to see Friis and Zennstrom start spending some of the eBay dollars as they evolve from rebel entrepreneurs to financiers. FON is the brain-child of Argentine serial entrepreneur Martin Varsavsky, who started Ya.com and JazzTel. Zennstrom said FON will help make broadband access available around the world by letting people share Wi-Fi connections to build a "global unified broadband network".This sounds more like a lofty manifesto than a business plan, which makes you wonder what the carriers, who are talking about implementing tollgates to generate more revenue, must think about FON creating a co-operative that provides free access? I'm going to have to think about this model, which is clearly disruptive, a little more but there's something about it that makes me uncomfortable. Perhaps the most obvious issue is the idea people will share their Wi-Fi connections at a time when we're being encouraged to password-protect them. At the same time, many ISPs are moving to traffic caps or tiered-service that encourage people to only pay for the access they consume. For someone adopting FON, it means the amount of traffic on their connection could explode. That's fine if you have an all-can-eat plan but you know ISPs will start to crack down if they suddenly see spikes in bandwidth consumption. Let's just say that I'm far from ready to jump on the FON bandwagon. It's an intriguing concept but I'm puzzled about how it managed to secure $21.7-million of VC with only 3,000 beta users and an entrepreneur with two hits on his resume.
Rob Hyndman offers a good overview, and some Canadian perspective, while the New York Times John Markoff provides the mainstream media take.
Update: Give FON credit for attracting a board of advisors that includes Dan Gillmor, Ester Dyson and David Isenberg - a very savvy marketing move by a company that clearly has a strong grasp on how to create a global buzz.

With all the talk about net neutrality and package prioritization, it's curious and interesting to see AOL and Yahoo unveil a plan to launch a system in which they will express deliver e-mail from companies who pay a quarter of a cent to one cent per message. According to the New York Times, senders who pay a fee can only deliver them to "people who agreed to receive  messages, or risk being blocked entirely". AOL and Yahoo argue the new system, which is being sold as a service that post offices have been offering for decades, will help e-mail senders and recipients avoid the hassles of spam and ensure messages are deliver quickly and effectively. While I'm sure Yahoo and AOL can justify the new system until the cows come home, it could be difficult trying to charge for something that has been available for free for the past 30 years. Then again, the Internet appears to be entering a new phase in its evolution as service providers (access, e-mail, etc.) look for new ways to generate revenue. What we're getting is a multi-tiered Internet with different prices for different levels of service: if you're willing to pay a premium, you'll get premiuim service. It sounds like life, doesn't it? It will be interesting see how much take-up AOL and Yahoo get from their premium e-mail service, and how long it will take for the spam industry to figure out a way to capitalize on this system or subvert/hack it. Another thought is if this e-mail system is accepted, what other kinds of premium services can be introduced?. Access providers could push forward with QoS options and packages featuring bandwidth and traffic tiers, while streaming music service providers could offer higher-quality service for an additional fee. At the very least, get ready to pay more to use the Web.