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BT creates Wi-Fi community throughout U.K.

Alliance with Fon effectively extends BT's Openzone network to every street in the U.K. where its Home Hubs are being used.

BT and Fon have finally confirmed their long-expected partnership, thus creating the largest Wi-Fi community in the world.

Fon was founded in Spain in early 2006. Broadband users who sign up to Fon's community agree to share their Wi-Fi connectivity through a separate, secure channel. They do this either for a 50 percent cut of the fees charged to their visitors or for the privilege of being able to surf other users' connections for free, though the community has since changed its rules to allow its members to do both.

One of the biggest hindrances to Fon's expansion has been resistance from Internet service providers, whose terms and conditions have tended to prohibit sharing of broadband connections.

Now BT, the largest ISP in the United Kingdom, has given its approval. By doing so, the telecommunications company has effectively extended its Openzone Wi-Fi network across the 3 million BT Home Hubs--or at least those Home Hubs whose users agree to share their broadband connection.

It is not yet clear whether BT users who share their connection will get remuneration for doing so, though it is likely that they will gain access to BT's new nationwide wireless network, plus Fon's global network of almost 200,000 hot spots. It is currently unclear whether BT's business customers will be offered the same deal.

BT has also invested an undisclosed amount in Fon and gained a seat on its board.

"This is the start of something very exciting for BT," Gavin Patterson, the managing director of BT Group, said Thursday. "Today we are launching a people's network of Wi-Fi, which could one day cover every street in Britain. We are giving our millions of Total Broadband customers a choice and an opportunity. If they are prepared to securely share a little of their broadband, they can share the broadband at hundreds of thousands of Fon and BT Openzone hot spots today, without paying a penny."

Patterson continued. "We have built a public Wi-Fi network and 12 wireless cities already, but today, we are saying to customers: let's build a Wi-Fi community together, which covers everywhere and serves everyone."

Martin Varsavsky, Fon's founder and chief executive, said, "From the beginning, Fon users believed in the concept of sharing and in the people's ability to participate in building something important that would benefit everyone," he said. "With BT Fon, those beliefs have proved to be well-founded."

Rumors that BT and Fon were in talks about the deal have been circulating for over six months, but Thursday's announcement is the first official confirmation of the tie-in. The collaboration between the two companies also raises the possibility of a comprehensive global network of Wi-Fi sharers--with the blessing of ISPs.

Fon has inked similar deals with Time Warner Cable in the United States--though that service is yet to be rolled out--and Neuf Cegetel in France, so BT broadband customers who agree to share their connectivity will soon gain free access to their counterparts' broadband in those countries.

Robert Lang, Fon's European chief, told CNET sister site ZDNet UK on Thursday that Fon had compromised, in that its users will have to pay, albeit at a discounted rate, to use BT's Openzone hot spots and Wireless Cities hot zones, rather than gaining access for free.

The deal means that users of BT Fusion dual-mode handsets will be able to use those devices in far more locations around the world than had previously been possible. Fon also has a software client that can be used on Nokia's Wi-Fi-enabled N series handsets.

David Meyer of ZDNet UK reported from London.