US LEC Provides Agents Key To VoD

By Khali Henderson

US LEC Corp. this month is rolling
out a new triple-play service that allows indirect sales partners, for the first time, to sell video-on-demand services along with voice and high-speed Internet to the hospitality industry.

The new service, called PowerSUITE, enables agents to bring a new revenue stream to their hotel and time-share clientele. Property owners as well as the agents participate in the revenue generated from the sales of high-speed Internet access and digital video services to guests.

In addition, the service is provided on a subscription basis to the hotel, so there is no upfront cost for the equipment or facilities required to deliver the service.

US LEC has teamed with ExtreamTV Inc. to provide the digital video component of the service. ExtreamTV has a marketing relationship with several VoD providers, such as Guest-Tek Ltd., which maintains the contracts with the studios for the content and supplies the VoD application and infrastructure.

We believe we have hit the mark with this one, says Aaron Cowell, CEO of US LEC. We went to do test marketing and had more requests from companies to make the pitch to them than we have ever had about any product we have ever launched.

US LEC, he says, began investigating a video offer about a year ago and this summer started talking about the proposed offer to prospects more than 2,000 hospitality properties already using its telephony services. At the end of September, the company had proposals for PowerSUITE out to organizations representing about 50,000 rooms, and several properties already are on board and being installed.

Among these wins are properties that are sold by US LECs indirect channel. [PowerSUITE] is something that we very much believe can and should be sold through channel partners, says Cowell. The folks in channel partner world see this as a whole new business line for them.

US LEC partner Dan Messner agrees. This is absolutely incremental revenue everything from the additional bandwidth that is needed all the way to providing the hospitality account with a new revenue stream that they did not have before, he says. Messner is vice president of Global Network Services Inc., a master agency based in Orlando, Fla., which he co-owns with his wife, Sue Messner, GNS president. The company was formed in 1993 to provide long-distance and operator services to hospitality clients. Today, about 85 percent of its customers remain in the hospitality space, but GNS product line has expanded to include local and Internet services. We actually started back in the mid-90s making most of our revenue from operator services and long-distance from our hospitality accounts, says Dan Messner. That whole base has dramatically fallen off with the introduction and popularity of cell phones and roaming programs. So, we definitely needed to find other ways to produce revenue for our company as we saw those revenues dwindling.

According to the Messners, PowerSUITE is a timely offer given the erosion in revenue from hospitality telecom offers. What we have seen in the hospitality market is not only have longdistance revenues and bill-to-room calling diminished, but … because there is so much cell phone usage, hotels dont have to maintain the number of lines they used to in the past, Dan Messner explains.

Sue Messner adds, even though some hotels already have movies-on-demand and high-speed Internet access to guest rooms, there are a tremendous number that dont. They all have high demand [for these services, especially Internet] on their surveys they receive from guests, she says. We think the timing is just outstanding.

GNS says so far three different organizations with multiple properties have committed to offering PowerSUITE. Some, like the Plaza Resort & Spa (pictured on page 24), in Daytona Beach, Fla., already are engaged in a phased rollout.

Its just such a great opportunity to be able to go into the hotel and say, We now have a revenue stream that you may not have at all right now that we can get started for you with next to no cash outlay and very little risk on their part. Basically the program will support itself with a movieand- a-half per room, per month of revenue, says Dan Messner. Thats the biggest strength of the program.

Alex Watts, vice president of marketing, confirms that with 1.5 movie rentals per room, per month, the costs for the program are covered. But, he says, with the availability of first-run movies in a digital format, ExtreamTV executives expect rentals to be closer to four movies per room per month, up from the industry average of 2.5 rentals. [Then] it becomes a real positive for the hotel, Watts says. Now, they dont necessarily have to worry about writing a check at the end of the month for services, but they can look forward to getting a check at the end of the month.

The digital format enables VCR-like controls for pause, rewind, fast forward, etc., unlike other systems that require you to block off the time to watch the movie if it is even available for viewing as many analog systems have limits on the number of simultaneous viewers. And, you dont have to worry if you get tired, you can turn it off and turn it back on in the morning, adds Cowell, explaining that movie rentals are valid for 24 hours.

In addition, the hotel will have input about the types of programming made available to guests. So, for example, they can opt out of offering rentals with mature themes. Additionally, Cowell says, PowerSUITE eventually will offer options for enhanced TV programming, such as episodes of popular cable TV series. ExtreamTV also works with cablecos to ensure the customary free-to-guest cable programming also is delivered to the rooms.

Installation of the video and Internet service requires the deployment of video and Internet servers at the property, but does not require rewiring. It can be delivered over whatever infrastructure is resident at the property CAT3 twisted pair, CAT5 or coax, says Watts. If its over CAT3 wiring, it comes up through twisted pair to the inroom phone system and is split over to the television and back to the desk unit for [access by] the laptop, he says, explaining this is enabled by DSLAMs placed in the hotels data closet.

Internet is offered the same way with a T1 providing the backhaul from the property. In the room, guests can hook up to the Internet using a laptop or via a wireless keyboard interface to the in-room TV. Wi-Fi is used to provide access in common areas.

Hoteliers also have the option of customizing the TV screen to promote their dining, spa or other services, and they can sell advertising space on the screen to local, regional or national businesses. ExtreamTV will be coordinating the advertising initiative, which is just now getting off the ground. An e-commerce component, enabling guests to click to buy also is forthcoming, Watts says.

ExtreamTV projects an average 250-room property will take in $75 per room per month with PowerSUITE depending on the services high-speed Internet, movies and advertising it offers and their price points (Internet is typically $9.99 per 24 hours and movies range from $9.99 to $13.99 each). The hotel will make between $3 and $10 per room per month. Its a little less than that ($2 to $10) for the agent, says Watts. The agent gets to sell the T1s, so they get their win-win up front. They [also] are signing new contacts for the voice products off the top.

Messner says a key point of the US LEC program is commissions are paid on top-line revenue not net. Many companies are trying to pitch a program that nets out money and it makes it complicated to administrate from the hotel side, he says. Basically [with PowerSUITE] as long as revenues exceed their monthly obligation, they are paid from the top line generated from all the sources.