Posted: 10/1999

Drive-Thru Communications
Visitor-Based Networks Satisfy Travelers’ Appetite for
Advanced Services
By James R. Dukart

Travelers
are demanding high-speed access to the Internet from hotels, convention centers and
airports. Software vendors, carriers and hosts are answering the call by building
high-speed, publicly accessible visitor-based networks.

In one way at least, guests checking in to the Four Seasons Hotel in Austin, Texas,
never have to leave the office behind. At the registration desk guests can use a
hotel-provided Latitude laptop from Dell Computer Corp., Round Rock, Texas, to check
e-mail, get news, weather or sports updates or connect to their corporate network. In each
room, guests with Ethernet-card equipped laptops simply plug into a wall jack to get
24-hour-per-day high-speed Internet access, avoiding time-consuming and costly analog
modem calls through the hotel’s private branch exchange (PBX). If a guest doesn’t have an
Ethernet card, they can even purchase one in the Four Seasons’ gift shop.

These guests are accessing an emerging area of public networking–visitor-based
networks (VBNs). VBNs are high-speed Internet access networks open to the public–or at
least to those willing to pay for high-speed access from a public terminal. Examples
include public kiosks at airports and in shopping centers, networks for hotels and
resorts, convention centers, universities, corporate campuses, even places you might never
have thought of, such as cruise ships and truck stops.

The networks are being developed and installed by partnerships of software providers,
carriers and network hosts. Right now, the biggest market is in the hospitality industry,
where the likes of the Hilton, Sheraton, Hyatt and Marriott hotel chains have begun
offering high-speed Internet access from their hotel rooms.

"We are early on in this market," says Stephen Drake, an analyst for
International Data Corp. (IDC), Framingham, Mass., who is following VBN development.
"Visitor-based networks address the needs of travelers who are fed up with
traditional dial-up analog connectivity through a hotel PBX system."

"We are basically a bunch of frustrated business travelers," adds Dirk
Heinen, vice president of marketing for VBN vendor Wayport Inc., the two-year old Austin,
Texas-based company that installed and maintains the Four Season’s VBN. "The mission
is to build fast ‘Net access wherever people travel, at speeds at least 50 times faster
than you can get from a dial-up network."

Drake says the market for VBNs will boom in the coming years, particularly as more
laptops become "VBN-capable," which he describes as having a portable PC card
that supports Ethernet connectivity. Of the 18 million portable PC units that IDC expects
to be shipped in 1999, Drake says, 53 percent will be considered VBN-capable.

Cambridge, Mass.-based Forrester Research Inc. calls VBNs "nomadic networks,"
and points to a growing cadre of traveling professionals who need high-speed access to
corporate networks and/or the public Internet to do their jobs. "In today’s
competitive business environment, employees can’t be chained to their desks," says
Charles Rutstein, telecom analyst at Forrester. "Rather, they must embrace a ‘have
computer, will travel’ philosophy."

The number of mobile users in an average large corporation, Forrester says, will more
than double within the next two years.

A Side Order of Internet Access, Perhaps?

Almost all current VBN solutions are based on 10BaseT Ethernet networks. The connection
can pass through existing wiring that is already Ethernet-ready or use technology such as
Washington-based CAIS Internet’s OverVoice to bring Ethernet over existing copper twisted
pair. Some suppliers also may roll out VBNs through existing cable infrastructure in
hotels.

VBN vendors generally sell a server that connects to an Ethernet hub in a hotel or
other host building’s telephone wiring closet, standard RJ-45 Ethernet jacks in guest and
meeting rooms, and network management and billing systems that allow hosts to bill
directly to rooms or credit cards. Guest-room users are billed an average of $8.95 to
$10.95 per day for 24-hour access to the network, charged only on the days they actually
log in to use the system. Meeting-room charges can run as much as $100 per hour, often
simply added to the meeting-room rental rate.

In addition to new revenue streams, hotels benefit from VBNs by having data traffic
split off from potentially overloaded PBX systems. "This plays very well wherever
there is a PBX," says Phil Griffith, vice president for sales and marketing at
Elastic Networks, an Alpharetta, Ga.-based company spun off from Nortel Networks,
Richardson, Texas, to concentrate specifically on VBNs. "You basically filter off
voice and it goes right to the PBX, and the data is split off to an ISP (Internet service
provider)." A VBN, Griffith says, addresses the "slow dial-up method that chokes
the PBX network."

Carriers, VBN vendors say, benefit in a couple of ways. One is the opportunity to sell
high-speed access to markets that might otherwise be hard to reach. Another is solutions
that are targeted specifically to visitor-centered markets. "Carriers are great at
getting high-quality bandwidth to the property," Heinen says, "but that is kind
of where the challenge starts." Wayport partners such as Time Warner Telecom,
Greenwood Village, Colo.; MCI WorldCom Inc.; and Qwest Internet, Denver, Heinen says,
count on VBN vendors to help hotel properties with billing, on-property network support,
user-connectivity questions and system maintenance. "They have the ‘last mile’
problem and we are solving the ‘last 500 feet’ problem," he says.

Gina Bohreer, regional vice president of the Southwest region for Time Warner Telecom,
calls VBNs "a perfect use of our infrastructure in the markets we are already
in," and notes that her firm is also the local services provider for the Four Seasons
Austin. "It creates a relationship with the hospitality property, and also a way to
reach business travelers," Bohreer says. "[VBNs] are probably one of the
greatest growth areas for us."

Elastic Networks partners include Williams Communications Solutions, Tulsa, Okla.;
Sprint Corp.; and Nortel. Griffith says carriers can also derive revenue from their own
ISP offerings, through partnerships with ISPs or through revenue-sharing arrangements with
hotels.

Such is the case with the Elastic’s partnership with Nortel Networks and TravelNet
Technologies, Pointe Claire, Quebec, to offer its DataValet solution at the Sheraton
Center Toronto, unveiled in May. The high-speed business network is currently available
for business travelers in 178 rooms and suites on the hotel’s Business Club Level, and is
in the process of being added to all 36 of the property’s meeting rooms. It lets users
connect to the Internet at high speeds as well as use the hotel’s printers and fax
machines to receive and print documents, all for an additional daily charge on their room
bill. The hotel even is adding 16 ports for business travelers in a unique "Table for
One" environment within its dining room, anticipating time-strapped business
travelers will enjoy a little high-speed access with their meals.

Menu of Revenue Options

Another major VBN player in the hospitality market is ATCOM/INFO, a San Diego-based
company that has agreements with Redmond, Wash.-based Microsoft Corp., Denver-based US
WEST Inc., Sprint Corp., and Tut Systems, Pleasant Hill, Calif., and holds key accounts
with the Marriott hotel chain, the Four Seasons in Los Angeles, the Embassy Suites Hotel
in Washington and airports in Boston, Seattle, Dallas-Fort Worth and New York.

ATCOM/INFO’s key product offering is its IPORT Internet Access System, which includes a
web server platform, billing system and network router. Sal Provenza, vice president of
sales and marketing for ATCOM/INFO, says IPORT’s Internet access services and products
have been installed in more than 3,000 hotel rooms in the United States, Latin America and
Asia. Earlier this year, ATCOM/INFO announced a new line of IPORT products, including
those geared to small hotel properties and a set of services geared to public areas in
hotels, such as lobby payphones, conference rooms and business centers.

"Where do business people go when they are not in their office or at home?"
Provenza asks. "They go to hotels, train stations, shopping malls, airports and many
other locations," he says, where they might need high-speed Internet access.
"IPORT’s Internet access services and products will soon be everywhere people travel,
eat, shop, visit or stay outside their homes."

Provenza says the appeal of VBNs to carriers is similar to the appeal of existing hotel
PBX networks or payphone banks. "If you are a telco, an RBOC (regional Bell operating
company) or a cable company, you would want to find ways to make it more provocative for
customers to use your bandwidth," Provenza says. US WEST, he says, is actively
involved with ATCOM/INFO for public Internet kiosks in airports, and all carriers are
interested in selling into hotel telecom networks.

A typical revenue-sharing arrangement between a hotel and carrier, Provenza says, may
actually grant the "lion’s share" of VBN revenue to carriers or service
providers for the first few years, after which time the property starts to gradually get a
bigger cut. Also, hotels have another way to use VBNs to drive revenue, he says, and that
is through customized "welcome screens" for network users. The welcome screen,
he says, can provide a list of hotel events, suggest restaurant or entertainment options,
or allow users to order room service, laundry service, audio-visual equipment or anything
else they might need to purchase from the hotel. In addition, hotels can market space on
their welcome screens to local merchants, including natural tie-ins like rental car
agencies, taxi or limousine services or travel agents.

Another important revenue stream for VBN partners is increased use of high-speed access
in hotel meeting rooms or convention centers. Don Kerchoff, director of sales and
marketing for the Four Seasons Austin, says his hotel can charge at least $100 per hour
extra for meeting rooms equipped with high-speed access, and that it is considered a
valuable benefit for technology companies or other clients who are able to link directly
to corporate networks for presentations, online training, video conferencing or other
high-speed interaction with corporate headquarters. The service, he says, is used an
average of 12 to 15 times per month, and will grow as users become more familiar with it.
Heinen says properties charge $100 to $150 per computer per day for high-speed connections
for uses such as online training. Provenza points out that ATCOM/INFO has launched a
partnership with PlanSoft Network, Twinsburg, Ohio, a corporation that provides
information to help meeting and convention planners select properties with its IPORT
system installed.

CAIS Internet likes the VBN market so much it has announced the purchase of VBN vendor
ATCOM/INFO, and plans to merge the company’s IPORT system with its own carrier
capabilities to provide an all-in-one solution to hoteliers, airports and other heavily
visitor-trafficked locations. The company already has agreements with Hilton Hotels, the
John Q. Hammonds properties, Haverford Hotel Partners, Garden Inns and Carlson
Hospitality, among others. Gary Rabin, executive vice president in charge of finance and
strategic planning at CAIS, says a key element of his company’s plan is the use of its
OverVoice technology to bring Ethernet connectivity over regular copper wire.

"Using OverVoice, we can provision a hotel room in about 10 or 15 minutes,"
Rabin says, adding that another key market for this type of technology is in multidwelling
units (MDUs) such as apartment buildings and condominium complexes. While initial VBN
rollouts are taking place mostly in North America, Rabin says the overall market will also
be very large internationally. "In the U.S., only about 20 percent of the population
live in multidwelling units, but overseas the percentage is much higher," Rabin says.

Rabin says there are many ways carriers can derive revenue from VBNs. In CAIS’ case, of
course, the company will carry VBN traffic directly on its own local loops and Internet
backbone. In MDUs, system users will be CAIS Internet subscribers. In hotels, airports and
at public Internet kiosks, users will be charged via credit card, but Rabin foresees the
use of a CAIS calling card or CAIS credit card in the future, with usage from public
terminals being billed back to a CAIS subscriber account. He also sees future tie-ins with
frequent flyer clubs and hotel partners.

Rabin calls the current state of VBNs, "just the tip of the iceberg," and
notes that CAIS already has a backlog of 200,000 hotel rooms to equip with high-speed
access. The company recently announced an agreement with Unisys, Blue Bell, Pa., to
accelerate OverVoice rollouts, hoping to equip more than 200 hotel and apartment
properties, or 60,000 units per month, in the United States over the next several years.

The purchase of ATCOM/INFO, Rabin adds, will give CAIS entry into the public Internet
kiosk market in airports, railway stations, convention centers and the public areas of
hotels, all places in which business travelers need quick, easy-to-use high-speed Internet
access. "You may be going from Dallas to Chicago to New York in one day, and you are
not checking into a hotel," Rabin says. "You need a place where you can get
accurate information and you don’t have to find some place to stop and plug in your
laptop."

Truckin’, Cruisin’ or Just Sippin’ Joe

Hotels, airports and MDUs, though, are hardly the only place VBNs likely will pop up.
Griffith says Elastic Networks sees a major opportunity in colleges and universities. In
dormitories, he says, many students now can get high-speed Internet access, but when they
go the library or other common area, access may be limited to a few public machines or not
available at all. An ideal use of a VBN, he says, is to provide sign-on access to anyone
who supplies a student ID, to which access charges then can be billed. Provenza says this
market could provide an attractive revenue stream for universities, which often get their
bandwidth at a heavy educational discount.

To illustrate how widely the concept of VBNs could be applied, though, Provenza lists
three relatively new initiatives–one still in the planning stages–of deployments of
VBNs.

The first, he says, is a national rollout of cyber-booths in truck stops. IPORT kiosks,
he says, have been a huge hit in truck stops, where drivers pay by the hour for high-speed
access, using either their own laptop or a managed PC to check schedules, log in to
corporate networks or send notes to their families during long hauls. Most booths have a
swipe reader so truckers can pay by credit card, but Provenza says early results showed
that many would prefer to pay in cash. As a result, many booths let users feed one-, five-
or 10-dollar bills into the units. Truck stops are ideal for this market, Provenza says,
because they must be available 24 hours a day and because the users rarely bring their own
laptops to the network.

Another such deployment, recently announced by ATCOM, is high-speed Internet access for
cruise ships. ATCOM has recently agreed to equip all 17 of the Royal Caribbean cruise
ships with IPORT systems, as well as equip future ships as they are being built. Provenza
says the cruise-ship offering will be one of the first major tests of the use of satellite
transmissions for high-speed Internet access.

Finally, Provenza says, the company is talking with Seattle-based Starbucks Corp. to
install IPORT jacks in its coffee shops, and has already completed pilots in the San
Francisco area. IPORT, he says, promises to deliver on the promise of cyber cafes, which
have been popular, though hindered by the reluctance of coffee houses and other retail
outlets to install, provision or pay for multiple phone lines for intermittent use.

James R. Dukart is a freelance writer based in Minneapolis. He can be reached at [email protected]