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Billionaire Chases T-Mobile, Bankrolls Free Internet Startup

Most telecommunications companies don’t like the idea of a free Internet, generally preferring that we all continue paying for access through fiber and cables. But a few in the industry know that can’t last forever. One of them may be Xavier Niel, the French billionaire who in a case of extreme bet-hedging is trying to buy one of America’s biggest carriers, T-Mobile USA, while investing in a startup that wants to bring free, cable-less Internet to the developing world.

Niel is the majority stakeholder in Illiad, a French carrier that features on our Most Innovative Companies list and which on July 31 made a $15 billion all-cash bid for T-Mobile USA. Now it turns out Niel has also put money into Open Garden, the San Francisco-based startup told Forbes, and its so-called mesh networking technology aimed at spreading online connections to anyone with a smartphone.

The startup’s FireChat app, in particular, lets users talk to one another “off the grid,” in mobile chat rooms without WiFi or cellular reception. Protestors in Taiwan and Iran have used it to coordinate themselves and avoid the state’s prying eyes, and the app may even come in handy to Burning Man attendees in the middle of the desert next week.

Open Garden wouldn’t disclose Niel’s funding, only saying that he was one of the angel investors to take part in the company’s seed round, where it raised $2 million. Open Garden has also raised $10.6 million in Series A funding, but would not say if Niel had participated in that round.

So interested is Niel in picking up a piece of T-Mobile that Illiad is preparing to improve its bid for T-Mobile USA, and according to Reuters is in talks with Dish Networks, Cox Communications and Charter communications about launching a joint bid. That almost put Niel in direct competition with another billionaire, Masayoshi Son. The founder of Softbank bought Sprint in July 2013 and Sprint until recently was trying to buy T-Mobile.

Open Garden claims to have been downloaded 5 million times, and says that in dense cities it would need at least 7% of the smartphone-wielding population to use it service in order to connect those users to the web without the need for WiFi or a carrier signal.

Hypothetically, if that kind of technology were to take off it would make many of the services sold by carriers like T-Mobile redundant. Mesh networking is probably years away from getting that sort of mainstream adoption, but Niel seems happy enough to help push its evolution.