Fixed Wireless Business

Netting Travelers with Iowaone.Net

A new software-billing bundle helps one WISP build momentum for an interesting business proposition with local hotels. But will there be an adequate amount of yield to make the profit-sharing venture work?

by Gerry Blackwell [September 16, 2002]

Coming up with a business plan and technology that work infallibly for building profitable broadband Internet services in hotels may be the challenge of the decade for the wireless industry.

For now, no two companies are doing it exactly the same way, and no one can claim that his is the best or only way. So who knows? Maybe the interesting variation being tried by Iowaone.net, a wireless Internet service provider (WISP) in Spencer, Iowa, stands as good a chance as any of succeeding.

According to Iowaone.net executive director Travis Mier, the company's approach hinges on using a new software bundle from LogiSense Corp. of Cambridge, Canada, maker of the widely-deployed Hawk-i ISP customer care and billing package.

Control factors
The new product, EngageIP, includes Hawk-i, integrated with LogiSense's new TrafficXpress bandwidth management and caching software.

In the Iowaone.net business model, it will own the networks—and in some cases desktop or laptop computers—in the hotels. Guests will pay for service by credit card and the hotel, which only has to supply the room and help market the service, gets a share of the revenue generated.

The beauty of EngageIP, Mier says, is that the tight integration of components means the package can manage the whole business process—something no other package he had seen could do.

"TrafficXpress allows us to open the door to the network [for customers after they pay] and the billing and customer management is all handled by Hawk-i," he explains. "It's completely automated."

When the guest's time—an hour or 24 hours—is up, TrafficXpress automatically shuts the door. And Hawk-I works out the distribution of revenue—again, all automatically.

The company would not be pursuing its current hotel strategy if it didn't have EngageIP, Mier says.

Cellular background
Iowaone.net started as a cellular phone company—it's CellularOne in Iowa. In 1998 it launched an ISP subsidiary and almost immediately began using fixed wireless to deliver high-speed access services to both residential and business customers.

It used 2.4 GHz last-mile network equipment from WaveRider Communications Inc. of Toronto initially. Later it switched to 2.4 GHz gear from Alvarion Inc. More recently it has come back to WaveRider to take advantage of that company's new non-line-of-sight (NLOS) 900 MHz technology.

Being a cellular company, Iowaone.net also has both fiber and wireless (licensed and unlicensed) backhaul capacity. The existence of the wireless backhaul capacity in particular is key to the hotel strategy.

At this point, Iowaone.net provides dial-up, leased line, and fixed wireless services in a dozen or so communities around Spencer, a small city about 175 miles northwest of Des Moines. (In Spencer, it also provides cable modem access through a municipally owned, cable TV company operating on an open service model.)

Iowaone.net has several hundred wireless subscribers and just less than 5,000 ISP customers altogether. The number of wireless subscribers has been roughly doubling each year, Mier says.

The company approached the hotel business as an ISP, not a hotspot network manager. In fact, initially, it saw it as something of a problem. Local hotels wanted the company to provide backbone connectivity for guest room services, for which they would then charge. Iowaone.net balked.

The company was set up to provide flat-rate service—$200 a month for a small business with four or five computers, for example. "How could we justify providing that same service for a company with 100 rooms," Mier asks? "It's really not fair to us."

It wouldn't be fair because Iowaone.net would end up being on the hook for much more backhaul capacity—to handle traffic from all those hotel rooms—without getting any incremental revenue. The only alternative it saw was to charge hotels a much higher flat rate, but that would have been cost prohibitive for hotels just starting out.

EngageIP provided a solution.

It lets the hotels offer high-speed Internet service—and despite northwest Iowa being a fairly rural area, this is viewed as an important value-added service, according to Mier.

"A lot of business travelers come through here," he says. "These services help the hotels sell more rooms."

Assignment strategies
Iowaone.net will use mainly low-cost wireless links from the hotels to its backbone network—though it will occasionally use fiber where wireless isn't reliable enough. Inside, it will use wireless or in some cases wired LANs. Only some rooms will have high-speed access.

What EngageIP does is let Iowaone.net measure and assign costs and revenues for the service on a guest-by-guest basis. "And that means we get a return on investment that is fair and equitable," Mier says.

The company will take its time executing the hotel strategy, though. It's about to launch pilot trials in five hotels in the area, but Mier believes it will take several months to fine tune the technology and business plan. He's looking at a commercial launch some time in 2003.

Given the dearth of large business hotels in the area, he doesn't see being in more than 10 or 15 properties by the end of next year. But he also sees using EngageIP to enable café hotspot and library services.

While the product was crucial to Iowaone.net's hotel business model, EngageIP was not in fact designed for hotel services or even WISPs, explains Brent Drewry, vice president of sales and marketing at LogiSense. However, the product is particularly apt for enabling various WISP business plans, Drewry argues.

WISPs (and other ISPs too) can reduce backhaul costs by exploiting the TrafficXpress caching features. The product makes it easy to layer on value-added services that can generate incremental revenue—including IP address filtering, which is built right in to TrafficXpress.

Remedy, not a cure-all
The tight integration of Hawk-i and TrafficXpress also helps WISPs improve efficiency by automating network management tasks. Customers who don't pay their bills, for example, can be automatically cut off after a grace period, saving the WISP having to manually monitor accounts and change the network.

Or WISPs could set up promotions to offer customers a 30-day free trial of 1-Mbps service, Drewry suggests. At the end of the trial period, if Hawk-i shows the customer hasn't opted to subscribe to the higher-data-rate service, TrafficXpress can automatically throttle the service back.

EngageIP is no panacea and implementing it may not be without problems. Iowaone.net, for example, can't use Hawk-i exclusively for customer service and billing because it has too much invested in the carrier-class system it was already using, which is managed by Verisign. So now it's looking for ways to at least integrate reporting from the two systems.

Has Iowaone.net hit on the ideal solution for high-speed hotel Internet service? The use of EngageIP is interesting, but to us this appears to be a reversion to discredited capital-intensive models in which the hotel has too small a stake in the success of the service.

—End