Paging the Datavalet - Page 2

By Gerry Blackwell

April 20, 2004

The business case for Wi-Fi is certainly compelling enough for hoteliers, at least at one level. Implementing a wireless network costs about $50 per room, he estimates. Implementing a wired Ethernet network costs $150 per room.

Wi-Fi, however, delivers only 11 or, at best, 54 Mbps of shared bandwidth, compared to Ethernet which goes up to 100 Mbps dedicated. Even the slowest Wi-Fi can provide enough bandwidth for high-speed Internet access services, but that may not be all some hotels want to do with it in the longer term.

"It's a question of their vision for Internet services," Labrosse says. "What's their intention with regards to [offering] other Internet-based services such as video and telephony?"

Labrosse implies that some hoteliers are not keen to go with wireless because they know they'll have to upgrade to get to the bandwidth they'll ultimately need -- and possibly upgrade more than once.

There are other problems with Wi-Fi. too. Security, privacy and control of user behavior -- no downloading porn in the lobby, for example -- are all part of what Travelnet has had to learn how to deliver with Datavalet.

While they are very conscious of the challenges around security and privacy, hospitality companies typically don't understand how tricky other aspects of engineering a Wi-Fi network can be, Labrosse says. The result is that some don't see why they should spend as much as they should on site surveys, for example.

"Doing a site survey is the most critical part of an implementation," he says. "And every time the site survey is not done properly, you inevitably have to go back in and do it over."

Travelnet has reached a maturity and level of success -- it has doubled revenues each of the past three years -- enough that it doesn't make those kinds of mistakes anymore. It is not just selling the Datavalet platform now, Labrosse says. It's also selling its expertise both in networking and the hospitality industry.

"We're in the business of assisting hotels to increase the loyalty of their guests," he says. "That's what it's about -- if a guest doesn't have a good experience, he won't come back. Our business is making sure that first experience is a good one."

Getting to where it is today has been an evolutionary process for Travelnet. When it began, for example, the company typically owned the in-hotel infrastructure and earned revenues from user fees. Today, most customers buy the infrastructure and pay Travelnet to manage it for them -- a typical evolution for hotel Wi-Fi companies.

The business model Travelnet and others adopted in the beginning was probably the only viable one. They couldn't prove the business case for high-speed Internet access in hotels then. Travelnet can now.

"Now that we have a lot of experience, we're able to demonstrate [guest] take rates, we're able to demonstrate how to de-risk an implementation. We're able to demonstrate how much the costs will be and how much the revenues," Labrosse says.

Given all this, and given Travelnet's apparent commitment to Wi-Fi, one wonders then why the company can't influence more customers to overcome their misgivings and adopt Wi-Fi. It appears it doesn't even try.

"We're not in the business of convincing hotels to go one way or the other," Labrosse says tartly.

Maybe Travelnet got out of that business after running up against a brick wall for too long. This may also be why it is now branching out into the service provider and enterprise markets with Ubilium.

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