How to Become an ISP for Free
An Internet Service Provider, or ISP, gives its users access to the Internet for a fee. Although you can't instantly become the next large ISP, like Verizon or Comcast, without any start-up cash, you can provide Internet service for a friend or two (all the way up to few hundred) without the need for additional equipment. If you decide to expand this as a business, then you will need to look into your local laws and any contracts you have with your current ISP, because you might be reselling their connection.
Add a 56k modem into your computer or use the existing one.
Connect the modem to your home's main telephone line. Because you want to do this for free, whenever someone dials into your ISP, you cannot make or receive telephone phone calls on this line.
Set up Windows ICS (Internet Connection Sharing) on the modem. In Windows 7, you can do this by going to the Start menu and typing "View Network Connections" in the "Search Programs and Files" text box. Choose "View Network Connections" from the list of programs and files to see your network connections page. Right-click on your modem and choose "Properties." Click the "Sharing" tab and check "Allow other network users to connect through this computer's Internet connection."
Add a new incoming connection and user account. In Windows 7, on the same network connections page, press the "Alt" and "F" keys and choose "New Incoming Connections." In the "Allow Connections to this Computer" pop-up window, choose "Add Someone" and give the person a user name and password. Click "Next" once and verify that the option "Connect Through the Internet" is checked; then click "Next" again. The next page will ask about protocols. This is where you will click "Allow Access" and then "Close."
Tell your friends your new ISP's phone number so they can dial into your modem. If they are using Windows 7, they can do this by going to the Start menu and typing "Network and Sharing Center" in the "Search Programs and Files" text box. Then they should choose "Network and Sharing Center" from the list of programs and files to see the "Network and Sharing Center" page. On that page, they should click "Set Up a New Connection or Network," which will display a window. Next, they should choose "Set Up a Dial-Up Connection" from the options listed. In the corresponding fields, they should enter your phone number as well as Step 3's user name and password. There will then be a listing for the dial-up connection in the taskbar's "Network Connections" pop-up window at the bottom-right corner of the screen. Your friends can use this to connect to you.
Wireless Hotspot Method
Install DD-WRT on your wireless router. DD-WRT is an open-source firmware that is installable on most consumer routers. Although this is a free method, it's best if you have a wireless N router and are located in a populated area, such as at a university.
Disable your wireless password access and install hotspot software. You can disable your wireless password access by logging into your DD-WRT router and visiting the "Wireless" section. Then choose the "Wireless Security" section and, under "Security Mode," choose "None" and "Save Settings." Chillispot and SputnikNet Express are two popular hotspot software offerings.
Configure your hotspot software to have ads. Ads will let your free hotspot ISP generate revenue whenever customers log on.