April 23, 2007 2:18 PM PDT

FON strikes deal with Time Warner Cable

The Spanish start-up FON, which makes Wi-Fi routers that allow people to share their broadband service, has signed its first major deal with a U.S. Internet service provider.

The company on Monday announced it is partnering with Time Warner Cable to allow broadband subscribers to access any FON Wi-Fi hotspot in the world, giving them the ability share their wireless service and roam wirelessly onto other broadband networks for free.

FON's software allows broadband subscribers to split their Internet connection so that it offers a secure connection indoors and an open connection to people outside the home. FON's La Fonera router, designed for easy installation, uses standard 802.11g technology. Users simply plug the device into their existing broadband modem, which turns their broadband connection into a FON access point.

FON says it has nearly 60,000 Wi-Fi users in the U.S. Time Warner Cable, which is the second-largest cable operator in the nation, could add its 6.6 million residential high-speed subscribers to the network with this deal.

Time Warner isn't commenting on the new partnership, but a company representative confirmed that it has signed a deal with FON.

The deal with Time Warner is the first of what the company hopes will be many more deals with U.S. Internet service providers, said Joanna Rees, CEO of FON USA. FON already has relationships with dozens of ISPs outside the U.S., including BB.Excite in Japan and Interoute in Germany.

These deals are critical for FON as it expands its business because it will alleviate the threat of lawsuits. When FON first launched its service last year, Time Warner was one of many U.S. broadband providers that said the FON Wi-Fi service violated its terms of use by allowing people to share their broadband connections outside their homes. But a spokeswoman for Time Warner confirmed that the cable operator has made an exception for the new FON service.

"Time Warner recognizes that its customers don't just want to use their broadband service at home," Rees said. "They are out in the world, and they want access where ever they are."

Indeed, Time Warner has already recognized the power of wireless mobility. The company along with three other cable operators have formed a joint venture with Sprint Nextel to develop and sell wireless phone services in conjunction with broadband and cable TV offerings.

Time Warner launched the new service, which it calls Pivot, last year. It's already commercially available in several markets, including Kansas City, Mo.; Raleigh, N.C.; Austin, Texas; Cincinnati and Dayton, Ohio. The company plans to offer the service throughout its 33-state territory by the end of the year.

Details of how the FON/Time Warner partnership will be marketed are still being discussed, Rees said. For now, Time Warner will not sell or distribute the FON Wi-Fi routers directly to customers. Instead, Time Warner's subscribers will be able to sign up for the Wi-Fi service through FON.

FON also plans to share revenue from "alien" users with Time Warner. "Alien" users are those who do not have FON routers at home and are not part of the network, but pay $2 to $3 a day to access the FON Wi-Fi network.

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