http://www.businessweek.com/magazine/content/07_42/b4054045.htm for the full article, an excerpt:

The BT deal should help FON’s network grow exponentially. Under the terms of the agreement, the British phone carrier will install FON’s technology in the modems of 1.7 million of its customers. In recent months, FON also has inked smaller deals to pre-install its software with cable operator Time Warner (TWX ) in the U.S. and phone carrier Neuf Cegetel in France.

Thanks to these deals, FON could become one of the few companies to cash in on the promise of Wi-Fi service. For years the technology has been promoted as the next big thing in telecommunications. But so far Wi-Fi has generated more bluster than business. Big tech players such as Intel Corp. (INTC ) and IBM (IBM ), for instance, have pulled the plug on some of their ambitious initiatives. "We view this as a transformational event," says Danny Rimer, a partner at European venture capital firm Index Ventures, which has invested in FON. "It should translate into significant revenue growth over time."

Who will win the race?

This article has some of the background.

Done any FONing lately? Most Americans have never heard of the Madrid-based tech startup called FON, but if founder Martin Varsavsky has his way, the name will enter the lexicon the way "Googled" and "Skyped" have. Thanks to a new joint venture with BT Group (BT), announced on Oct. 4, he may have a shot.

There were several blog mentions on this, I took the image from there announcing the birth of BT FON, Congratulations to BT and FON to quote:

Now the Net is abuzz with the news: FON has joined forces with BT to make FON accessible to over 3 million of BT’s Total Broadband customers, creating a potentially unrivalled WiFi community.

Congratulations to FON for this fantastic news, from the original post:

Neuf Cegetel, the number one alternative carrier in France with over 3.5 million subscribers, and FON have updated the Neuf Box 4 (the latest Neuf Router, based on open source operating system) so Neuf subscribers can activate the new Neuf WiFi FON service, share their WiFi with Foneros around the globe, and get free WiFi access on all FON Spots everywhere. Already more than 500,000 Neuf Boxes have been centrally enabled with this FON software upgrade and the subscribers can now become WiFi sharers and receivers. By the end of 2007, around 1 million Neuf Boxes will have been upgraded with FON functionality.

Again Congratulations FON, this is a fantastic develop and a huge step forward in a WiFi free world!

In the cover article of CNBC Europe, the full article is here.

The one thing that caught me was the news that a new router will be released that can go up to 400m in range! Cool.

FON’s premise is that subscribers agree to share their existing internet connection via a router that the company provides. This means that someone in your street can be surfing the web via your router, which beams out its Wi-Fi hotspot over 100 m. In return, those who sign up receive a user name and password allowing them to access other FON hotspots worldwide without having to pay a cent. Significantly, non-participants in the scheme can also access a FON hotspot at a cost of $3 (€2.20) per day, some $7 cheaper than the typical fee charged by established hotspot providers. A new router scheduled for release later this year promises a 400 m range, meaning extortionate hotel internet charges could soon be a thing of the past as free Wi-Fi is beamed over from an office or café four streets away.