ISP Profile: STSN

You may not know STSN, but you know its customers. The company provides premium broadband Internet service to hotels around the world—hotels you definitely have heard of.

by Alex Goldman ISP-Planet Associate Editor [February 20, 2004]

Salt Lake City, Utah-based STSN was founded in February, 1998, to provide services to business travelers in hotels, airports, and conferences. At the time, it was one of many companies competing in the same space, but now, in 2004, the competition has dwindled. What did STSN do right that so many others did wrong?

It was the boom times that ISPs know so well, and STSN's competitors were making mistakes that were also being made by VC-funded, high spending ISPs. Sandra Richards, STSN director of marketing, explains, "back in 1998, hotels didn't appreciate the need for high speed Internet access. Companies were throwing money at hotels to take the service."

"Initially, STSN also paid for equipment, but we were a little more conservative," she says. "We stopped giving it away when we could. Customer feedback was important. Hospitality started telling hotel management that high speed Internet was important."

Another problem the business faced (as all broadband businesses faced in 1998) was that some companies were installing equipment that just didn't work. "We have a reputation for delivering stuff that works," says Richards. "We have taken over some properties that were wired by now-bankrupt competitors who had installed stuff that didn't work, and have re-outfitted those properties."

"People were just trying for a land grab," adds Brett Molen, STSN CTO and co-founder. "They were not building a sustainable business."

STSN is successful. The company is growing fast, but it is already large. The statistics speak for themselves. STSN delivered over 500,000 Internet connections in January alone. It serves 900 hotels worldwide, of which 550 are wireless enabled (with access points in common areas) and 50 hotels have wireless throughout (no wires, even in guest rooms).

The industry as a whole is growing fast, with same hotel sales of wireless access doubling every three months (that's a sixteen-fold increase each year).

STSN also claims to have served over 13,000 conferences last year (that's barely more than one per hotel per month, so the conference business probably has room to grow, even though 13,000 conferences is a very large number of conferences).

Wiring hotels presents some particularly difficult problems for ISPs. One problem is scalability. Each discrete deployment requires its own infrastructure. Another problem is billing. Just as CLECs were finding it difficult to interface with out of date ILEC billing systems, so too STSN had to contend with the hotels' billing systems. Other difficulties also exist.

Molen says that STSN's success is all about getting the details right. It is about business common sense. It is also about better than average security.

"One thing that helps out," says Molen, "is our diagnostics and management controls that are so good that our competitors wanted to license them. It allows us to be more efficient in security and on the customer service side."

The company standardized its network plans early, making management of multiple networks easier. "Some companies would install different network devices and components at each hotel," explains Molen. "We built a blueprint for wiring a generic hotel."

STSN also realized economies of scale by using ISP-style POPs in major urban areas. "They give us economies of scale on our backhaul, and also on security, such as the firewall," says Molen.

Richards says hotels appreciate STSN's well-managed network. "We can see what's going on and manage connectivity; they don't have to call their ISP about connectivity and hardware problems. We own it all and manage it all and that makes it more efficient."

The company also made the right connections in the hotel industry, linking up with the industry's movers and shakers, such as the family-owned eponymous hotel chain Marriott and also less well-known families who own multiple hotels in franchise systems.

Billing remains a headache, though. The hotel billing system is known in the trade as a PMS, for Property Management System. Molen says that he's seen half-duplex systems (which can transmit or receive data, but not both at the same time), and he's seen systems with very slow speed. "Early on, I was doing an install and I was at 4800 baud, and I was asked to bring down the speed because it was too fast."

STSN is now working with the vendors of PMS systems so that Internet use is billed as Internet use, with business travelers' employers will pay for, and not as movies or alcohol, which employers will not pay for.

The future seems bright for STSN. The company no longer has to persuade hotels that the Internet is a good thing. Instead, the company is working hard to sell the value of security. "We're educating hoteliers about what they need," says Richards. "Hotels need to provide Internet service, but it can also cause liability. They need not just the Internet but secure broadband."

The company is aggressively promoting its security, recently inviting Fortune magazine's Peter Lewis to sit in on a white hat hack session (see the article Hacking Inn, subscription required, or the .pdf).

In order to make its network ever more secure, STSN works with sophisticated end users. "We're talking to CIOs," says Richards. "We're learning their concerns and integrating those concerns into our networks."

As the company moves forward, it is offering more sophisticated services to large companies, and improving its hotspots, which is the subject of another article, STSN's Hotspots.

—End