BT joins with FON

BT Retail today announced it had joined forces with FON, the WiFi hot-spot sharing community network. Customers with a BT Total Broadband connection will be invited to join the FON network. BT will also take a stake in, and join the board of, FON.

Comment: FON has already signed up over fifteen ISPs including NeufCegetel in France and Time Warner Cable in the US. This latest announcement is a big coup for FON. It means that BT Retail's Broadband customers that join FON can make use of other FON users' WiFi connections anywhere in the world.

We've generally given a fairly cool reaction to FON since it launched in November 2005. Our main objections have been that there's a big difference between doing someone a favour such as giving someone a lift from A to B and handing over your car-keys to let them take your car there themselves. Broadband tariffs in the UK are often based on volume of data consumed, and anything that leads to more uncertainty over usage in a highly price-conscious market is not necessarily a good thing. BT's lowest priced broadband package has a 5GB user limit and is probably a popular choice; a few hours of extra broadband data per month from a BT Broadband FON customer (Fonero in the parlance) perhaps watching a web TV service such as Joost or 4oD could increase data usage to the point where customers are contacted by BT to upgrade to the next tariff. Or that might well be the user perception, which could be a problem for BT. Security of transmitted data to and from the broadband home (such as e-mail exchanges, chat and form-based data in web pages) by potential Foneros may well be perceived as a problem even if, in reality, it is not. This will be an issue for BT to manage.

On the plus side the cost to BT is probably fairly minimal and the risks are not great - it may also start to position BT Retail as less of a corporate entity and more of a cool company at least as far as the target consumers are concerned. As a marketing story it is a certain headline-grabber.

However, most consumers don't frequently take their laptops outside the home, nor are WiFi-enabled pocketable devices particularly widespread at the moment, so we think this will initially appeal to a small segment of users. WiFi performance from inside buildings to outside is poor at the best of times, so performance for applications like VoIP over WiFi it will be unpredictable and not as convenient as a conventional mobile phone to manage. Mobile data usage is most likely to be prevalent where people undertake their leisure activities, not in residential neighbourhoods. Finally we don't think this will lead to a significant number of users choosing to migrate to BT broadband in preference, but it might be nice occasionally to have a bit more choice of hot spots for those frequently on the move.