FON goes for “WiFi nation” — a start-up to watch

This company is sure to generate some buzz.

A number of big-name technology investors — including Skype and Google, have put $21 million into a company called FON that wants to build a global WiFi community allowing members to share WiFi hotspots so they can access the Internet while traveling.

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We’ve prepared a story for the Mercury News tomorrow, and the gist of it follows below. But see the blog post of the company’s founder here to get it straight from horse’s mouth.

The start-up, based in Madrid, has received the first round of venture capital from Internet telephone…

company Skype, search engine Google, and two venture capital firms, Index Ventures and Sequoia Capital.

FON will enable its users to synchronize their home WiFi hotspots so that, if they have paid for a broadband connection at home, they will enjoy instant access to all the other hotspots on the FON network.

For Google and Skype, the incentive is clear: It allows people to more frequently use applications like the Skype phone service or Google Maps and Google Talk, because they will be able to access them on the go, on a variety of devices.

FON hopes to partner with Internet service providers to allow users to have access to the service.

Martin Varsavsky

The service, which officially launches tomorrow,has been tested for the past two months, and has gained 3,000 users around the world, FON chief executive Martin Varsavsky told us.

FON offers people free software to download to their computers, which will then open up their WiFi routers, allowing password-protected access for others. At first, the service will only be compatible with Linksys routers, but FON plans to offer a download compatible with other routers, said Varsavsky.

Varsavsky founded the second-largest Spanish Internet company, Ya, and the second-largest, public telecom company in Spain, Jazztel.

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People willing to open up their network for use by other FON members will get free access to other hotspots while they travel. People can also charge for access to their WiFi hotspots; but in return they give up free access to the network while they travel. And people who haven’t paid for a connection at home will also have to pay a fee when using the network.

Varsavsky aims to make FON the world’s largest provider of hotspots by the end of this year, beating out current leaders like Boingo and T-Mobile.