Tuesday, March 6, 2007

High-speed Internet: total cost vs. initial price: understanding the true cost of your hospitality high-speed solution

A recent Google search for hospitality high-speed Internet service providers returned a staggering 72,597 hits! No wonder there is so much confusion when evaluating which high-speed services best suit your needs.

There are many variables to consider, but with the pressure to make immediate decisions that satisfy brand standards, initial price instead of total cost often drives the ultimate decision.

What follows is a suggested framework for evaluating the total cost of ownership for a hospitality high-speed Internet solution.

Cost of capital

The cost of capital depends on the technical solution chosen. Retrofitting an existing property with Cat-5 wiring is often very expensive and disruptive and can mean lost revenue from unavailable rooms. Another common misperception is that wireless equipment costs--and therefore wireless solutions --are cheaper. This is not necessarily so. The cost to properly design and install a network that is reliable, secure and "commercial-grade" can equal or perhaps even exceed the cost of some wired solutions. Further, the cost of wireless guest activation devices, or Nic cards, needed for guests to connect is a cost that is often overlooked. At $200 or even more per bridge device--not including the cost to replace them when they "walk away"--adds an unpredictable cost element to the wireless total cost of ownership.

Bandwidth prices have dropped significantly, but the cost of a T-1 typically still ranges from $550 to $750, depending on your location and whether you get a "fractional" or a "burstable" pipe. In some cases, the T-1 investment does double duty--providing long-distance phone services as well as delivering HSIA. But, leveraging that infrastructure can prove disappointing as connection speeds to the guest are sometimes compromised, and the need for additional T-1 lines can become necessary to satisfy guest demands. The smaller the property, the greater the cost per room.

Service and support

This is the area in which the most variability exists. A recent survey conducted by Comcast to its online visitors revealed this to be the most important consideration when evaluating service providers. In an effort to get the best price, many hoteliers may be tempted to select the cheapest solution. This is a risky decision since the cost may result in failing to meet the service expectations of the guest and sacrificing repeat business and occupancy rates.

Maintenance/break fix

Many hoteliers believe that their risk is covered by manufacturers' warranties. That is partly correct--to a point. Most equipment manufacturers warranty their equipment, but only for the first year. Beyond that, many times there can be a time and materials charge to replace, upgrade and otherwise maintain the equipment. Since most HSIA contracts are three years, that leaves 24 months of uncertainty for the hotelier. Some service providers offer annual maintenance agreements, but the scope is often limited. In all cases, their cost must be considered when calculating the total cost of ownership.

Asking the right questions in order to expose all of the total costs will assure that you make a HSIA decision today that is right for your property, your budget, and your guest experience.

Comcast HospitalityONE[TM] is a broadband platform that delivers a portfolio of services to the hospitality industry. Leveraging Comcast's leading position in the hospitality market--with 650,000+ rooms and 10,000+ properties now served by its video product--HospitalityONE provides high-speed Internet access and free-to-guest video using its existing network and the property's existing infrastructure. This cost-effective approach to providing guest, meeting room and public spaces services also supports the efficient deployment of future offers including VOD and VoIP as they become available. For more information on Comcast HospitalityONE[TM], visit www.comcastone.com.