Technology has invaded face-to-face events. If you stand in the back of a breakout session and observe attendee behavior, you’ll see what I mean. Today’s attendee brings a smartphone plus an iPad or laptop to every event. She is a hyper-connected multitasker, a member of the new “on-demand” generation. She expects to be able to check e-mail, post tweets, and stay productive at all times.
And the trend is not limited to attendees. When you consider the connectivity needs of speakers, staff, and exhibitors, it quickly becomes clear that your conference has a small army of data-hungry devices whose owners rely on you to procure the right amount of bandwidth to keep them happy and connected.
Oh no, the dreaded B-word! Few terms evoke such a variety of emotions in conference planners as “bandwidth.” Anger. Confusion. Frustration. Helplessness. Misery. You’ve probably felt some or all of these when discussing bandwidth with your event’s Internet supplier.
But wait, can’t participants just use their 3G or 4G data plans from their cell phone carriers? In theory, letting everyone self-serve might work for smartphones. However, it falls apart when you consider that 91 percent of tablet owners and 98 percent of laptop owners rely on WiFi to connect to the Internet, according to comScore.
Okay, then what if attendees turn their smartphones into mobile hotspots? Or use MiFis to create wireless hotspots for all of their devices? The fact is, most people either don’t know how to do this or don’t want to burn through their cellular data plans. Plus, your venue may not get good cellular reception from the four major U.S. carriers. At best, some of your attendees can self-serve, but the majority will rely upon WiFi (and thus, your bandwidth).
It’s at this point you realize that you’re stuck. You’ll have to fork over some serious cash to your event’s Internet Service Provider to get access to its bandwidth. Ah, yes, that mystical, complex, seemingly elusive commodity: bandwidth. I’m going to let you in on a little secret: ISPs in the event industry have had a great run. For decades, they’ve been in the fortunate position of selling a technical service—Internet access—to a less technical client base of meeting and event planners. This dynamic has allowed them to take liberties in the way they price their service.
It is true that ISPs have a lot of fixed costs and long-term capital investments in network infrastructure. However, for a variety of reasons, it’s tough to determine the right amount to charge each event to turn a profit. So ISPs take clever shortcuts. Many in-house ISPs charge for each device you connect to their network, even though there is roughly zero marginal cost to assign an IP address to a device. Another common practice is to charge per megabit of bandwidth, a commodity that has such a small monthly cost that relying upon it to construct a pricing mechanism is almost comical. But laugh they do, all the way to the bank. Let me show you what I mean.
Let’s say you are hosting a conference for 2,000 attendees at a major convention center. You plan to order a WiFi buyout to cover the entire event. You need a 100 megabit (Mbps) circuit to satisfy your bandwidth needs. The going retail rate for bandwidth at most hotels and convention centers in the U.S. is $1,000 per Mbps, or $100,000 for your event. By comparison, I recently received a quote of $22 per Mbps or $2,200/month from a tier 1, national ISP to provide a 100 Mbps circuit to the Las Vegas Convention Center (based on a one-year). Assuming most centers can contract for bandwidth at similar rates, at one event per month, a quick calculation shows that your 100 Mbps circuit has been marked up an astounding 4,445 percent. Even if your conference was the only event held at the center for the entire year, the markup would still be 278 percent.
At this point, you may be thinking there is something wrong with my math. The math is correct. The example highlights the gross disparity between bandwidth costs incurred by a venue ($22/Mbps) and the retail rates charged to conference planners to use this bandwidth ($1,000/Mbps). Given the amount of bandwidth required at today’s events, the exploitative business practice of marking up bandwidth 4,445 percent imposes severe and unintended consequences on conferences and their attendees.
How will things play out in my scenario above? The conference planner will most likely be forced to purchase less bandwidth than the 100 Mbps circuit her event requires due to budget constraints. If she can only spend $30,000, she’ll receive only a 30 Mbps circuit. (The remaining 70 Mbps will sit idle, benefiting no one.) The online elements of the keynote presentation will take forever to load, checking e-mail will be painful for attendees, and exhibitors will cringe on the expo hall floor when their streaming videos sputter in front of clients. Not to mention those interactive way-finding kiosks our conference planner had to forgo since she couldn’t afford the ethernet drops required to support their online features. If you’ve ever been in this situation, you know that everyone feels the pain of the bandwidth pricing dilemma.
So why hasn’t the market corrected this glaring inefficiency? Most in-house ISPs derive their market power from two cleverly crafted myths:
- Scarcity Myth: Bandwidth is a limited resource. There is only so much of it at the venue. Its use must be metered and controlled to ensure everyone’s needs are met.
- Exclusivity Myth: There is only one exclusive ISP at the venue. Contractually, they control the purchase and use of all bandwidth on site.
Both myths are contrived. Regarding scarcity, every major city in the U.S. is served by dozens of ISPs that would be more than happy to sell you 100 Mbps of bandwidth for your event—just do a Google search for them or use the WISPA directory. With the free market providing bandwidth as low as $22/Mbps, most conferences should be able to afford ample bandwidth for their needs without breaking the bank, provided they source it directly.
Let’s move on to the exclusivity myth. The FCC legislated to prevent telecommunications exclusives with the Telecommunications Act of 1996, but for some reason, nobody has challenged our industry’s dubious business practice of Internet exclusivity in the courts. So long as in-house Internet exclusivity remains unchallenged, we will all suffer the consequences. Some of the most egregious offenders are third-party in-house ISPs who, by virtue of their business model, maintain a separate profit-and-loss statementfrom their host venues. Rather than looking at the entire economic impact of an event, their strategy is to milk clients for every last penny since they may never see them again. Their “we’ve got you right where we want you” attitude is reflected in every client interaction. This is no way to build a long-term business, much less a de facto set of operating practices, yet this is exactly what has happened in the event industry.
The best way to challenge in-house Internet exclusivity is to negotiate early, prior to contract signing, to remove any exclusive telecommunications clauses and associated surcharges for bringing in your own bandwidth. By doing so, you gain the freedom to submit requests for proposals from independent ISPs and compare their offerings to your venue’s bid.
As the CEO of an independent ISP for events, I care about the success of the event industry as a whole more than preserving an archaic, contrived bandwidth pricing model that has hamstrung our industry. I believe that by allowing market forces to keep bandwidth pricing competitive and more closely aligned with actual costs, we will enable all event planners to procure the right amount of bandwidth for their events, even under tight budgets.
The net results will be far reaching. Hundreds of event-based technologies will embrace the Internet and flourish, leading to an improved attendee experience. Imagine an industry in which every conference has access to ample bandwidth to satisfy its needs. Imagine an environment in which all suppliers of mobile-event apps, audience-polling solutions, and QR-code technologies are not limited by unreasonably priced bandwidth. Envision more speaker presentations with live-streaming content and exhibitors with live demos of their cloud-based software. Consider the possibilities for virtual attendees who will be able to view an event’s live video stream online and interact with digital event content. In this new world, entrepreneurs and product developers will be motivated to create amazing registration, lead retrieval, and way-finding technologies beyond anything we’ve imagined. This bright, high-tech future of events is only possible if we, as an industry, agree to destroy the artificial bandwidth pricing model and rebuild the system from the ground up. As for the ISPs, don’t worry about us, we will adapt and evolve.
In the words of John Lennon, “You may say I’m a dreamer, but I’m not the only one”. Dare to explore, dare to challenge, dare to dream—who knows where we may be able to take our industry if we do.
Ian Framson has 10 years of experience as an entrepreneur, executive, and investor in software, security, and Internet companies. In 2008, Framson co-founded Trade Show Internet to solve Internet and WiFi challenges at events. The company provides network consulting services including comprehensive wired and wireless network deployment at events. Reach him at firstname.lastname@example.org.