BT buys into the FON WiFi network

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The UK’s top fixed-line telco, British Telecom, has partnered with with Wi-Fi startup FON which will allow its three million UK broadband customers to roam across eachother’s WiFi hotspots, and those of FON users across the planet.

As part of the deal BT has also taken a stake in FON, which already counts Google, eBay, Sequoia Capital and Index Ventures among its investors, in a bid to create “the world’s largest Wi-Fi community”. Argentine entrepreneur Martin Varsavsky (who also blogged the announcement), founded Spanish-based FON in February 2006, and it has signed up telcos including Russian conglomerate AFK Sistema and France’s second largest fixed-line telecoms operator Neuf Cegetel.

BT members will now be part of a community of 500,000 members and will have access to more than 190,000 FON hotspots worldwide. BT’s ‘Total Broadband’ retail customers will also be able to use its existing 7,000 Wi-Fi hotspot network and its 12 “Wireless Cities” around the UK. Crucially, BT’s WiFi boxes (such as the BT Home Hub) can be used for FON, so it’s no longer necessary to get a physical FON device, as in the past.

That’s nice, but it must be pointed out that customers need to opt in to the scheme to share a small portion of their home broadband connection first. So the network doesn’t actually exist right now – it still needs BT’s marketing muscle. And although it’s a relative no-brainer – opt in and you get free wireless elsewhere – I can’t see all three million of BT’s customers suddenly signing up and sticking their WiFi box out the window.

And BT clearly isn’t just doing this for fun.

This essentially a customer acquisition, retention and defensive strategy. Being able to pay for broadband at home, but getting access to what is in effect ‘free’ wireless outside the houses of other BT customers in the UK – and other FON subscribers around the planet – is a good sales story. Plus it’s a reason to stay with BT, which is struggling to launch other customer retention services like it’s IPTV play BT Vision.

The ‘defensive’ bit is perhaps as much about attack. With mobile data usage rising, consumers – especially geek types, it must be said – are experimenting with things like VOIP and Skype on the mobile. If BTs customers can roam across the UK both with a WiFi laptop AND, say, IP-enabled mobile handset, BT will be in a position to add a mobile data feather to its cap.

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