FON Tries To Make A Market In Undercutting Starbucks' WiFi Fees

from the the-decaf-of-business-models dept

While the commercial prospects of the WiFi network FON may not be clear, the company certainly is good at drumming up publicity for itself. It started off by letting users decide whether they wanted to be a "Linus" or a "Bill" -- Linuses let people use their hotspots for free, and in return get to use the rest of the network for free, while Bills charge for access, split the proceeds with FON, but don't get free roaming. It then got back in the news when it attracted some big-name backers, but a viable business model still doesn't seem to have emerged, despite comments from the company's charismatic founder that it wants to build a ubiquitous network and take on mobile operators. FON's been getting some ink again lately because it's been giving away thousands of free WiFi access points (with no real clear plan of how to ever generate revenues with them), and it's back in the news today with a plan to give free hardware to people who live near Starbucks locations. It's hoping to convince them to become "Bills" and generate some revenue by undercutting the rates Starbucks and its hotspot provider, T-Mobile, charge for access. FON charges $2 per day, compared to T-Mobile's $10 -- and then gives $1 to the user providing the actual hotspot. It's nice to see the company's taking some steps to try and generate some revenue -- since the problem from the outset has been that everybody could simply choose to be a Linus, and no money ever comes in -- but the plan may be built on the faulty assumption that there's actually a huge pool of Starbucks WiFi users looking for a cheaper day rate. Back in 2004, it certainly didn't look like Starbucks WiFi was making much money, and a lack of noise since then makes us think little has changed. Obviously $2 per day is a lot less than $10, but with so many other coffee shops and other places offering free WiFi, it's hard to see FON's plan generating much more than some additional publicity. And, last time we checked, publicity on its own doesn't pay the rent.

And With Those 200 iPhone Patents Come The Inevitable Patent Disputes

from the nuclear-standoff dept

We've spent a fair amount of time discussing Apple's decision to hype up the 200 patents it supposedly holds on technologies included in the upcoming iPhone. Initially, we wondered why they actually needed such patents -- as it was hardly a protective measure. Try as they might, no other company is going to easily come up with a phone that has nearly the same brand factor that Apple can muster up from its fans. Furthermore, it's been pretty clear that most of the "new" features seen the iPhone aren't really that new. About the only explanation we heard that made sense for hyping the patents was to make up for the bad deal the company signed with Cingular, which will limit the distribution of the iPhone initially.

However, a second reason is becoming clear -- and it's (unfortunately) one of the most popular reasons for getting (and hyping) patents these days: nuclear stockpiling. That is, you want to have all these patents to hopefully ward off others with patents who will want to take a bite out of your success should your technology go anywhere. Already, we've seen claims from LG that Apple was copying an LG phone with its iPhone design. The latest, pointed out by Engadget is that Quantum Research, who has already sued Apple over the click wheel on the iPod is gearing up to sue over the touch screen interface, which it claims to hold patents on. "The description of the iPhone suggests it uses a rear-surface touch screen, and has proximity sensing which can tell if it is held to the ear. That's a QR capability." So now Apple can saber rattle back with its collection of 200 patents against anyone who claims infringement on it -- and then hope that the threat of all out nuclear patent war leads the two sides to come to an "agreement." It's not efficient. It's not good for innovation or progress... but it's how the system works, and it's why so many patent attorneys don't want it to change.