“It’s outrageous,” said Sarah Hayden, CEM, convention manager for Kiwanis International, describing the $80,000 fee that a major North American convention center quoted for basic Wi-Fi service during the group’s meeting. “I understand there’s a cost for wireless, but $80,000 is a big chunk of money for a nonprofit. We’re not an association with high connectivity needs. We just wanted to give our attendees the ability to check their email.”
Hayden has plenty of company among other meeting planners, show organizers, and exhibitors who feel they are paying fees and rates that are well beyond what it should cost to provide wireless connectivity at a reasonable margin of profit. The question of fair and reasonable access to Wi-Fi at conventions gained national prominence in October when the Federal Communications Commission (FCC) announced that it had fined Marriott International $600,000 for blocking use of mobile Wi-Fi in the convention area of Marriott’s Gaylord Opryland Resort & Convention Center in Nashville “while at the same time charging consumers, small businesses, and exhibitors as much as $1,000 per device to access Marriott’s Wi-Fi network.”
So what is the story behind the seemingly high cost that meeting organizers pay for Wi-Fi — when their attendees can get it for free at Starbucks and the library? Not surprisingly, the answer is complicated.
BIG DEMAND = BIG INVESTMENT
Wi-Fi has rapidly become an essential communication and business tool around the globe. The number of public hotspots worldwide is expected to grow 350 percent from 2011 to 2015, according to the Wireless Broadband Alliance. Everybody wants to be connected wherever they are, especially at meetings, where attendees now walk around with at least two Wi-Fi-enabled devices, including smartphones, tablets, and laptops. They’re checking email and Twitter feeds, and uploading photos and videos on social media. At the same time, planners increasingly are engaging attendees with audience-response systems and mobile apps. And exhibitors want the convenience of wireless connectivity to demonstrate their products and services on the show floor.
Amid this exponential growth in demand over a span of less than 10 years, venues are scrambling to get the necessary Wi-Fi infrastructure and network-management expertise in place — and keep on top of upgrades, which, thanks to advances in wireless technology, need to happen on shorter and shorter cycles. It all translates into big investment costs, even as certain destinations are setting the bar very high. San Jose, for example, recently completed installation of its “Wickedly Fast Wi-Fi” free public network at its airport and convention center. “Conventions and exhibitions are an extremely competitive business,” Vijay Sammeta, the city of San Jose’s chief information officer, said in a news statement, “and we believe offering not just free but proven, high-performance, reliable Wi-Fi will attract more business to the convention center, which, in turn, will help us generate more revenue for both the city and businesses across downtown.”
Of course, as the capital of Silicon Valley, San Jose is a select example. Convention venues in most other cities are in a different boat. To keep up with Wi-Fi demand, many of them have contracted with an exclusive provider of Internet services, with the provider typically carrying the cost of investment and on-site network management. In exchange, the venue gets a share of revenue from Internet services. This business model has raised questions with plenty of critics.
The most important thing is to be sure customers are able to “continue to do business at our events — or they won’t do business at our events.
“There’s a strong case to be made for why Internet-services providers should be exclusive,” said Corbin Ball, CSP, CMP, DES, a frequent speaker on technology at industry meetings. “And planners, exhibitors, and attendees should certainly expect to pay for premium Internet services. But ‘exclusive’ shouldn’t translate into prices that are monopolistic. Venues should not consider Internet services as a major profit center. Charging $1,000 a day just because you can is not fair.”
David DuBois, CMP, CAE, CTA, president and CEO of the International Association of Exhibitions and Events (IAEE), offers this point of view: “More than 90 percent of the country’s convention centers operate at a deficit. Facilities are under enormous pressure to reduce operating losses, and they have to look to maximize revenue streams where they can.” He added: “A meeting planner’s job is to negotiate. Free-market dynamics are always in play.”
But with one company, Smart City Networks, operating as the exclusive technology-services provider for more than 35 major convention centers in the United States — and 3,000 events annually — planners might wonder if free-market dynamics are indeed in play. “I have worked with Smart City in at least seven different venues,” said Leslie Zeck, CMP, CMM, director of meetings for the International Association for Dental Research (IADR). “Being limited to one company with no wiggle room for negotiation has really hurt our bottom line from year to year. I have never seen a multiyear discount for using Smart City for successive conventions. We do meetings across the globe. In many convention centers around the world, the Wi-Fi is free or significantly cheaper.”
Smart City declined to be interviewed for this article. But Jeff Johnson, executive director of the Minneapolis Convention Center (MCC), where Smart City is the exclusive Internet-service provider, said that the MCC’s revenue-share with Smart City “falls in line with many of our other ancillary revenues.” He added: “Internet infrastructure, security, and service really drives the pricing structure and the move toward exclusive providers. We’ve all become accustomed to having Internet as almost a ‘right’ or utility, but our clients expect a safe and fast Internet, with personal on-site service to help with troubleshooting. The expertise and equipment needed to provide a high level of service in an ever-changing technology scene is very important.”
STANDARD PRICING MODELS? THERE ARE NONE
Whether a venue’s use of an outside, exclusive provider drives up costs or not, one thing that adds to the confusion of Wi-Fi pricing is the lack of standard pricing models. Depending on the facility, a planner may be asked to pay based on — among other scenarios — bandwidth alone, bandwidth plus the number of places where the wireless signal is provided, or the peak number of wireless users connected at one time. Pricing may not be scalable, which means exorbitant fees for big events. Some venues may offer free Wi-Fi in public areas only, others in select areas of the building, and still others everywhere. Because of that variability, it can be difficult for planners to comparison shop and make informed decisions about what their events actually need.
“When it comes to pricing for Wi-Fi, it’s the Wild West,” Michael Owen, president of EventGenuity, said in a session at PCMA’s Convening Leaders 2014 annual meeting in Boston last January. To negotiate Wi-Fi pricing effectively, Owen said, meeting and event organizers must have a reliable estimate of the bandwidth needs of attendees, exhibitors, presenters, and event operations, as well as the number of Wi-Fi-enabled devices likely to be used. A detailed Wi-Fi-consumption report from the venue immediately after the event is a critical planning tool for an organization’s next event.
Planners also have to be able to “talk the talk,” MaryAnne Bobrow, CAE, CMP, CMM, president of Bobrow Associates Inc., said at the same Convening Leaders session. Bobrow chairs the Convention Industry Council’s Accepted Practices Exchange (APEX) Bandwidth and Connectivity Workgroup, which is focused on educating meeting professionals about connectivity. “You don’t have to become a technology expert,” Bobrow said, “but you do have to know the right questions to ask, and have enough knowledge to even the playing field in a negotiation.”
Randy Field, vice president of the customer success group and operations technology for Reed Exhibitions, suggests that planners think less about simply negotiating free Wi-Fi and more about negotiating the best connectivity deal overall. “We push for free ‘light business use’ Wi-Fi in every location within a venue. This means no streaming, just the ability for light Internet browsing and, of course, email,” Field said. “With a free option to stay connected, customers are rarely upset about fees for the next level up — as long as the price is fair market value.”
The most important thing is to be sure customers are able to “continue to do business at our events — or they won’t do business at our events,” Field said. “The main focus should be keeping our customers connected. That is always the first step to a positive experience.”
A LAST RESORT
What about bringing in your own Wi-Fi network provider? Is that allowed in a venue that has an exclusive provider? It may sound like the Internet-provider equivalent of the nuclear option, but Ian Framson, sales director and co-founder of Trade Show Internet, a leading independent Internet-service provider, has long held that several FCC regulations preserve the right for people to set up their own Wi-Fi hotspots — and select their own providers — at events. “Wi-Fi is a public [unlicensed] spectrum,” Framson said, “so even on private property, such as inside hotels and convention centers, it is the FCC who regulates wireless spectrum in this country. Not the venue. Not the show organizer. And certainly not the in-house ISP.”
Indeed, he said, the FCC’s recent fine against Marriott International is more proof that venues can’t prevent individuals or event organizers from setting up their own Wi-Fi access points or networks. “Yes, the Wi-Fi spectrum can get overloaded, rendering a worse experience for some or all users,” Framson said. “One good, non-technological solution would be to have someone — show management, the general service contractor, or perhaps the in-house ISP — coordinate and suggest folks set their Wi-Fi access points to broadcast on non-overlapping channels.”
At the end of the day, the signal-interference argument for exclusivity “is really all about revenue interference,” he said. “When signing an agreement, do not sign anything with telecom exclusivity. Make this an open-bidding category, and force venues to compete on price and quality.”