STSN rides Wi-Fi crest

As more business travelers demand secure, high-speed Internet access from their hotel rooms and conference centers, STSN has emerged as a leading ISP in the hospitality industry.

Founded in 1998, STSN is a Salt Lake City start-up that provides wired broadband connectivity to 580 hotels in North America and Europe. Earlier this year, STSN received a $15 million investment from the Intel Communications Fund to rollout Wi-Fi services at additional hotel properties throughout the U.S., U.K. and Germany.

The STSN deal was one of the largest venture capital investments in the ISP industry during the first half of 2003. Overall, venture firms have pumped more than $488 million in 50-plus telecommunications start-ups this year, according to the MoneyTree Survey complied by PricewaterhouseCoopers, Venture Economics and the National Venture Capital Association.

In the next few ISP News Reports, we’ll look at Internet infrastructure and service provider startups that have succeeded in raising large amounts of money from the venture capital community this year. With cash in hand, these companies are deploying new IP-based services for corporate network managers.

For STSN, the key to raising so much money was its focus on Wi-Fi.

“Our Wi-Fi service is growing at an incredible rate,” says Sandra Richards, director of marketing at STSN. “We’ve hooked up 425 hotels with Wi-Fi service in six months. That compares to the five years it took us to install 580 hotels with wired broadband access.”

Richards points out that Wi-Fi is still a relatively new technology and not all business travelers can access it yet. That’s why STSN’s wired broadband access services continue to experience rapid growth.

What business travelers want is “secure connectivity to corporate VPNs,” Richards says. “It’s not so much the technology that they care about but the application.”

STSN’s strategy with both its wired and wireless services is to own the network. Company officials say this strategy helped attract investors for the Wi-Fi rollout.

Owning the network “makes us more competitive because we can control costs,” Richards says. “We can serve hotels better because we can deploy IP addresses as needed to accommodate a big conference.”

STSN isn’t the only Wi-Fi carrier to get venture capital funding this year.

“We see a lot of funding going into Wi-Fi,” says Kirk Walden, national director of venture capital research for PricewaterhouseCoopers. “Wi-Fi is an early-stage industry. It’s still a wide-open frontier.”