Startups to watch

In the freewheeling wireless era, the PC is in your pocket and the network is in the air. No surprise, then, that gadgets from Apple's iPhone to a SanDisk MP3 player are being built with Wi-Fi inside.

But finding a Wi-Fi signal when you need one can be a problem - and a big opportunity for Fon, a Spanish company that's building a global community of hotspots one router at a time.

The idea for Fon hit founder Martin Varsavsky in late 2005 while he was strolling through Paris with his PDA in search of a signal. Companies like T-Mobile were spending millions of dollars to build hotspot networks and charging dearly for access.

Varsavsky, however, saw the potential for a worldwide Wi-Fi network in the home broadband connections already in place. All that was needed was a service to tie them together.

Here's how it works: Fon sells a $30 wireless router to consumers. They hook it up, register their node, and agree to share their broadband with other "Foneros" for free. Those who want to charge outsiders for access can do so, and Fon gets a cut. Likewise, if someone wants to pay $2 or $3 to use the Fon network for a day, Fon takes a share of that revenue. Just over a year old, Fon's network boasts more than 70,000 hotspots. Initially focused on Europe and Asia, Fon plans a big push in the United States in the coming months.

Tell us what you think about Fon: Is the company a Web 2.0 winner?

Funding: $22 million (Google, Index Ventures, Sequoia Capital, Skype)

Founder: Martin Varsavsky (shown above)

Headquarters: Madrid, Spain

Employees: 90

Founded: 2006

Business model: Subscription, router sales

Bragging rights: 400,000 users (including 40,000 Americans added since October); signed as-yet unannounced deal with first major U.S. broadband service provider

Next up: In deal talks with U.S. cellular service provider

Contact: Faisal Galaria, fonus@fon.com