Deutsche Telekom has signed a Wi-Fi sharing deal with Fon, enabling its customers to gain access to millions of Fon hotspots in exchange for making their own home routers available to other Fon users. The German market leader says the agreement, known as WLAN TO GO, fits perfectly with its network expansion strategy, and it hopes to set up more than 2.5 million additional hotspots via home broadband connections by 2016. Deutsche Telekom also plans to launch the Fon service through its subsidiaries in Bulgaria, Greece, Romania, Slovakia and Hungary later this year.
Fon currently supports more than eight million Fon Spots, with more than nine million subscribers in the United Kingdom, France, Spain, Belgium, the Netherlands and Croatia, who share their broadband networks in return for access to Fon's services. The Spanish company also serves a large Wi-Fi community in Brazil, and although this network is not yet included in its European sharing deals, Deutsche Telekom hopes to offer customers access in time for the 2014 soccer World Cup. Fon has recently signed a similar deal with KPN in the Netherlands, which has been hit hard in both the fixed and mobile sector by increased use of VoIP applications such as Skype, but hopes to fight back with the Wi-Fi partnership deal.
The deal is one of many recently announced partnerships between home broadband providers and Wi-Fi specialists, whereby the broadband operators are leveraging their ever-increasing capacity to turn home Wi-Fi routers into public access points. This kind of partnership also offers larger network operators such as Deutsche Telekom a way to optimise their investment in high-speed broadband infrastructure - particularly costly fibre-optics - as well as improving customer retention via an improved service offering. The service also offers Deutsche Telekom an opportunity to ease the increasing pressure on their cellular (3G and 4G) data networks, by offloading data use from smartphones and tablets onto Wi-Fi networks, whilst improving customer connectivity both home and abroad. Deutsche Telekom accounts for 46.5% of all broadband subscriptions in Germany, so this deal has the potential to provide widespread Wi-Fi coverage.
The agreement does not affect the home broadband customer's data allowance, whilst the public and private access connection is split, meaning home broadband customers do not face any risk to their privacy or from dubious use of their Wi-Fi connection. In exchange for sharing their connection, home broadband users are granted access to millions of hotspots worldwide, free of charge. A potential consumer concern is that heavy public Wi-Fi usage may slow their connection speeds, but with home connection capacity outstripping demand - and many home networks lying idle during business hours - this is unlikely to be a major problem in all-but the busiest city centres.
UK incumbent BT has been a significant investor in Fon since 2007, and jointly created the BT Fon Community by including Fon's software on all its broadband Wi-Fi routers. The service offers an added advantage to BT as it can wholesale Wi-Fi capacity to mobile operators. While, Deutsche Telekom's competitors in Germany will loathe resorting to a competitor for Wi-Fi offload, there may not be a cheaper alternative. The international nature of the Fon network could also end up eating into mobile operators' roaming revenue.