High Speed Internet Access: From Free to Fee

By Mike Uwe Dickersbach | August 10, 2008

As we all know, high-speed Internet access (HSIA) was the buzz word of the industry in the not-so-distant past. The next buzzword to follow was wireless, and judging by the HITEC shows over the past two years, other current and coming buzzwords rely on some form of HSIA, or rather the network that supports it.

So what if I said the current buzzword, or more accurately, buzz phrase, is: "We need to start charging for high-speed Internet access, again."  Now, before you go off and dismiss this article, hear me out.

Let's take what we know. HSIA, brought on by the demand of the business traveler, vacationer, student, and your 15 year old child, has become a necessity in almost every hotel and household. Currently we are giving people access to the Internet, but that's changing quickly, or rather, has changed already. The Internet, and the technology that brings you the Internet, has become the mode of transportation for services such as video on demand (VoD), streaming music, live video games, and phone service. All of these services require a good portion of bandwidth, which most hotels today are not ready to accommodate.

To charge or not to charge?
In the future, guests will want to do everything they can do from home or on the road. Sure, you say they can do that now, but how many people really are? Is your internal HSIA solution capable of handling 100, 200, even 300 rooms of streaming media at the same time? Chances are that they probably cannot. Older systems offered HSIA to the guest room; you probably didn't care about the speed in the guest room, as long as it was faster than dial-up.
 
So why will you charge? Simple. The next technology driver in your hotel won't be HSIA or wireless, but rather how much bandwidth you need. In order to provide megabits to the guestroom, be it 4, 6, 10, 100, or 1,000, you will need the cabling or broadband and network infrastructure to support it, not to mention the right size pipe going to the Internet. Many companies, including Verizon, have begun rolling out 10, 15, and 45 Mb Internet connections to residential homes and charging a premium for the added bandwidth. The consumer is already paying this premium for the speeds necessary to accommodate their home. 

Bandwidth options
For the hotel to support these speeds, money will need to be spent to update older broadband solutions that may not be able to deliver the bandwidth needed in the guest room. Your connection to the Internet will become the centerpiece for all technology within the guest room.  Why not charge a connection fee for playing your X-Box Live? What's a three dollar charge for you to connect to your home PC to stream your own movies or music? All of these items directly impact ancillary revenues that we used to receive in the guest room. In a sense, we always charged for these services in the past, so why give them away in the future?

There is a happy medium: tiered bandwidth. I was able to beta test one of the first tiered bandwidth solutions for the hospitality industry nearly five years ago at our Embassy Suites location in Richmond, Virginia. The property had monthly fixed costs on bandwidth and was giving away HSIA at no charge. When we implemented the tiered bandwidth solution with iBahn (www.stsn.com), we set it up initially on three separate tiers, one of which was free to the guest at the lowest speed. The results were astonishing. The hotel began making a considerable amount of revenue every month; enough to pay for the bandwidth and some of the equipment fees.

The options are out there, but only you can decide if it is appropriate for you to charge, give it away, or something in between. However you play it out, one thing is for certain: the Internet and the way we use it is constantly changing. The day will come when most hoteliers must upgrade their bandwidth due to guests' demands. We need to be ready to either take on all those costs, or provide a new Internet experience at some cost.

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