David W. Garrison is Chief Executive Officer ofiBAHN. Mr Garrison joined iBAHN in October 2002, bringing with him more than 20 years of experience in leading telecommunications and technology services companies in the wireless and Internet industries. Mr Garrison previously served as chairman and CEO of Netcom, a pioneering Internet service provider. At Netcom, he successfully led NASDAQ financings, using the proceeds to expand geographically within the US, to build one of the first Internet networks. Additionally, he expanded the operationsinternationally to create atop-rated Internet company in the UK and Canada. He has served as an independent director on several boards of private and public companies, including chair of the independent directors committee at Ameritrade.
Video-centric tablets, iPad in particular, have swept the market with their unprecedented growth. They are a particular favourite with travellers, including the over 65 and non-computer-literate users. This puts pressure on the hospitality industry to respond to the demand and avoid bad experience.Streaming videos generates far more traffic volumes than even smartphones. The iPad reception capability is lower than that of PCs, straining the WiFi access further. Mobile carriers,who see falling Voice revenues, now rely on rising revenues fromvideo trafficon 4G mobile broadband, but hotel guests prefer sharing accessacross several devices and paying for WiFi access instead of ‘burning out’ mobile quotas. This is an opportunity for the hospitality industry to attract these high-earning guests by enhancingtheir WiFi facilities and fine-tuning the way that they are charged.
New kinds of handheld communications devices, new web applications and the proliferation of WiFi are accelerating a technological and behavioural evolution. Pictures and text are supplanting -- if not outright replacing – voice communications. New devices are driving that evolution and none more clearly than the tablet computer, particularly the iPad.
To understand the potential impact of the iPad, consider that three million iPads were sold in the first 80 days of its availability – equating to more than 37,000 per day. By the time of the iPad 2 launch in March 2011 (less than a year after the iPad 1 release), more than 15 million iPads had been sold – selling more than all other tablet PCs combined since the first iPad release. The iPad 3 release, which occurred in March 2012, was even more dramatic – three million were sold just during the first weekend. Gartner Group predicts 100 million iPads will be sold globally by the end of 2012. That’s only the Apple tablet format -- there are more than five dozen other tablet computers currently available from various global competitors.
What makes iPad different?
The answer to this question paints a clear picture of what the future holds in hospitality connectivity requirements.There are several characteristics of the iPad that make it different from other devices currently carried by travellers, like laptops and smartphones – which mean that hoteliers, in particular, now have a new set of requirements in order to support travellers’ activities:
• The iPad is the first truly video-centric guest Internet device (along with other tablet computers now on offer to consumers). Remember, video streaming and sharing burns bandwidth much faster than voice, text and email. In fact, Cisco estimates that video streaming can be as much as 600,000 times more data intensive than text/email.
• It is the fastest selling consumer electronics device in history
• It is driven by a highly intuitive user interface requiring no significant existing computer skills. New users are up and running with an iPad in an average of one hour. This easy interface means it’s not only a device for the computer savvy. A major chip manufacturer reports that the iPad is the fastest growing device among adults older than 65!
• All iPads are fitted with WiFi capability. Of the total number of iPads sold, some 75 per cent are equipped with both WiFi and 3G capability – so it’s easy to understand why these devices are already creating hotel network/bandwidth problems – especially when coupled with the high video needs of iPad users.
• iPads place huge demands on WiFi systems, consuming 400 per cent more WiFi data on a monthly basis than the average iPhone, iPod or Android device, according to a recent report from Meraki.
There is another fact about iPads: the antenna reception on iPads is significantly lower than other devices, particularly laptops, creating a setting for negative guest experiences. The chart below shows that mobile devices like the iPad are (on average) about 30 per cent worse than laptops in terms of signal reception.
Based on network data, iBAHN estimates that approximately 25 per cent of the devices on the iBAHN network are now Apple devices. Considering the fact that these devices have been specifically designed to allow users access to their own content as well as cloud-based content, and that video streaming requires more bandwidth for an acceptable experience, it is easy to understand the coming challenge for hotels and other hospitality-based venues. In fact, the average iPad user downloads three to four times more data than they would on a smartphone, directly due to video download and streaming demands. The antenna reception of the iPad 2 is worse than the iPad 1, not better. Data for iPad3 antenna reception will be available soon – and our prediction is that the new iPad will not have improved receptivity.
What’s the impact on the mobile carriers?
Mobile carriers, suffering from a continuing decline in their revenues from voice and text services, are looking to data plans to increase the subscriber base and maintain revenues. At an average cost of £15 for a standard two gigabits per month scheme, the mobile carriers are justifiably excited to see the rapid acceptance of video-centric devices like the iPad – particularly those carriers with LTE networks on which the quality of streaming is extremely good. “Every month in the UK the average mobile phone subscriber will talk for 240 minutes, send 300 texts, and use 133Mb of data. The voice calls, somewhat surprisingly, are still slightly on the rise, but texting is up nearly 50 per cent on a year ago and data use has more than doubled.” (BBC.co.uk - 11 April 2011)
Data from the US paints a similar picture:“As data use grows, people are talking on their phones less. The average subscriber used just 638 voice minutes per month in 2011, down from 720 minutes in 2010. Customers are cutting back their voice plans, sending carriers' average revenue per smartphone user down to $83 per month last year. That's a drop from $86 in 2010 and $93 from 2009. LTE offers download speeds of between five and twelve megabits per second -- about the same or faster than the typical home broadband connection. In many ways, the 4G technology is capable of displacing WiFi, though the industry's spectrum limits and usage caps by mobile carriers make WiFi necessary for data-intensive operations like streaming video.” (CNN Money, 25 March 2011).
The picture isnot quite so rosy for the travelling public. The ease in which all of one’s monthly data on a 4G/LTE networkis to use up in just a few hours makes using mobile networks for video streaming unsustainable for travellers. This means, of course, that travellers are looking for ways to continue to use their iPads and other devices on WiFi networks instead of mobile carrier networks. In other words, they want to use WiFi instead of their 3G, 4G or LTE subscriptions, where their streaming capacity is quite limited.
What’s the relevance to the hospitality industry?
Fast-forward now to a business or leisure traveller checking into their chosen hotel. Even if the establishment charges a fee for Internet access, it is a significant benefit to have the ability to use their video-centric devices without using their own mobile data plan. In some cases, they can connect more than one device to the hotel’s network, i.e. smartphone, laptop and tablet.A late 2011 USA Today survey showed that nearly 25 per cent of travellers are carrying three devices. So, the hotel WiFi network has become a better way for travellers to be able to use their video-centric device to access their chosen content, without burning through their monthly mobile data plan.
Travellers are changing their usage habits, as well. According to a 2011 YPartnership survey, 40 per cent of European business travellers have incomes well above the norm in developed countries, thus providing higher disposable income. Further, they are likely to spend it disproportionately on new technologies like the iPad. The same study indicated that nearly 30 per cent of respondents say they are likely to carry only a tablet device like the iPad when on future business trips. Then, consider that more than 55 million iPads have already been sold and the message becomes clear: the hospitality industry must move quickly to be able to support these devices.
Why should the hospitality industry care?
The average hotel’s WiFi system is already overloaded. Some 60 per cent of surveyed travellers in America, Europe and Australia indicate that they already have had a poor downloading experience in a hotel because the system was too slow. The advent of the iPad can only increase the number of unhappy guests. A key driver of future success for hotels will be the ability to provide guests with the same level of technology capabilities they have in their homes and offices. With 67 per cent of guests stating they will not return to a hotel where they have had a poor technology experience, the ability to provide good experiences in using the same devices at home while they are traveling is now an imperative.
If a hotel or other hospitality venue has a WiFi system that was designed and installed prior to 2010 – which means the design was built around laptop antenna reception – iPad-carrying travellers have a much higher likelihood of having an unacceptable Internet experience. We see the numbers of travellers having bad experiences rising as use of these video centric devices continues to filter into all global markets.Data versus voice traffic growth is another indicator of guest behaviour changes in hotels – much like the way that mobile phones have changed the telephony picture in the hospitality industry. In looking at the iBAHN network usage chart below, while there is continued incremental growth in voice traffic, the geometric growth for data (read: video) traffic will change the requirements for hoteliers.
So what’s the takeaway?
Thought leaders in the hospitality industry now need to prepare to support guests carrying iPads, and should expect their numbers to continue to grow rapidly. Among those preparations, players in the hospitality industry should consider these two key points:
• Any WiFi system in hotel, restaurant or convention centre that was designed and put in place before 2010 is likely to need to be reconfigured to support the video demand arising from new devices like the iPad, and to take into account the lower antenna reception of tablet computers.
• Unlimited free WiFi may no longer make sense in this new environment of increasing video streaming, unless venues have unlimited bandwidth, along with unlimited budget to continue adding bandwidth capacity.
In short, the advent of the iPad has created both a challenge and an opportunity for the hospitality industry – this device has already begun to show its power to change how travellers work and play while on the road for business or pleasure. Thus, the global hospitality industry has a unique opportunity to show the worlds’ travellers that it is in synch with their needs, now and in the future.