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« Bluetooth Will Add 802.11 for Bulk Data Transfer | Main | A quick oral analysis »

February 11, 2008

T-Mobile Loses Starbucks; AT&T Becomes Wi-Fi Hotspot Giant

Big news, and I had not an inkling of it, lest you think your loyal correspondent always has the inside track: Starbucks is shredding its deal in place since 2001, originally with MobileStar then T-Mobile, to switch to AT&T as their Wi-Fi provider. That moves 7,000 locations from T-Mobile's ledgers of nearly 9,000 to AT&T's. It turns AT&T from "McDonald's plus," with a relatively small footprint of other locations, to a 17,000-location giant. It also means that 12 million DSL customers and fiber (U-Verse) subscribers and 5 million remote-access business customers now get free access to Starbucks.

AT&T says in their press release that all Starbucks Card holders, which is simply their value-storing swipe card system, will get two hours of free Wi-Fi a day. No purchase is needed: you just need an active card, I confirmed with the company. Walk in, buy a $5 value card, activate it, and you're on for two hours a day from then forward. You can also use multiple devices with a single account, within reason, Starbucks told me. AT&T has also lowered the price for usage from T-Mobile's somewhat egregious $6 per hour or $10 per day to $4 for a two-hour session. The monthly price, like the rest of AT&T's network, is $20 per month for outsiders, which also includes all 70,000 domestic and international locations in their worldwide roaming network.

And--yes, there's an and--all Starbucks employees, 100,000 "partners" (read: wage slaves and management) get free access at all Starbucks locations. Which you have to admit is a nice perq.

AT&T is also part of Boingo's roaming network, which means that their customers suddenly get 7,000 highly desirable domestic roaming locations at no additional cost. (iPass has long had a T-Mobile roaming relationship.) The same is true for other AT&T roaming partners, an AT&T spokesperson confirmed.

T-Mobile HotSpot subscribers will still be able to access Starbucks locations. Starbucks posted a separate press release stating that T-Mobile will be a roaming partner onto the AT&T network through a side deal; no additional cost is involved. There's some leverage here, because T-Mobile does have about 2,000 other locations, including some premium airports like San Francisco. Existing roaming/aggregation deals among Boingo, AT&T, and T-Mobile were partly predicated on the airport market, where millions of subscribers to each network pass through each year.

I should have seen this coming, because it was extremely odd when Apple partnered with Starbucks for the iTunes Wi-Fi Music Store service, when their exclusive iPhone partner is AT&T and Starbucks had the T-Mobile deal. This also may pave the way for in-store iTunes Store media servers, which would--as I have written too much about in the last few years--allow someone to use the edge network, the WLAN not the Internet, to pull down a movie in a few minutes instead of an hour or two on a home network.

Wayport just sent out their press notification; the Austin, Texas, firm has been providing managed services for AT&T for the telecom's own network for a few years, but also operates through its own relationship the 8,000+ McDonald's locations. AT&T has been the backhaul provider, as I understand it, for most of the McDonald's deal. It's a bit intertwined. Wayport's hotspot growth has been limited in recent years as the market for where Wi-Fi could go became saturated; this move is exceptionally good for the privately held firm.

The deal goes into place starting market-by-market in the second quarter of 2008, and will be completed this year.


That's great news. I cancelled my T-Mobile account a couple months ago after analyzing how little I used it, it was simply the coincidence. Barnes and Noble uses AT&T and I'm able to login with my home's broadband credentials. I hope this agreement offers the same! Woohoo!

Any idea whether current T-Mobile subscribers' contracts will be dissolved? I would do anything to not have to pay $29.99/mo(!) for the next year(!) if I don't have to, and that $4 per 2 hours sounds downright affordable in comparison.

Up in Western Canada I think it's 7 bucks an hour, $17 for a day and over $30 per month at Starbucks. They get their wifi service through Bell, one of the 4 giant "we'll do what we want" internet/mobile providers. Hence no iPhone in Canada yet.

As an iPhone subscriber, will I get to use Wifi for more than just iTunes at Starbucks with this deal? Or will I have to pay additional?

[Editor's note: That's the $20 per month question! The wireless and consumer divisions at AT&T are reportedly not great at talking to one another. Starbucks and Apple might have to mediate. No real news yet.-gf]

I am curious what happens to the current accounts registered with tmobile through Starbucks. Will those accounts be automatically canceled? Will they be transfered?

[Editor's note: Just found the answer. Starbucks announced that T-Mobile and AT&T have a separate no-fee roaming deal, so T-Mobile subscribers will continue to have access to Starbucks locations. If you want to use AT&T as a provider, you will have to cancel one and start the other, almost certainly.-gf]

According to the Starbucks press release, T-Mobile customers will continue to have access to Starbucks as part of their Hotspot or wireless data plan.

"In recognition of the many T-Mobile customers who enjoy visiting Starbucks, the Company is also announcing that T-Mobile HotSpot customers will be able to continue to access Wi-Fi services at no additional cost, through an agreement between AT&T and T-Mobile."

When this is all done, T-Mobile's cost structure should go down dramatically. We will see what will happen to their plans and prices.

I also wonder whether the deal between TMO and ATT allow for access to ATT airports or other locations?

Finally, the big question from a cost of the new Starbucks, AT&T service surrounds the details of the 2 hours free for Starbucks Card holders. Do you only need to buy a card once for access forever or is it only activated in conjunction with a purchase that day?

Where do you see in AT&Ts press release that AT&T DSL subscribers will get free access? I read it and could not find any mention.

[Editor's note: AT&T is very market-speak in their releases. U-Verse is the name of their DSL service; all 12 million U-Verse subscribers (DSL subscribers) get free Wi-Fi service.- gf]

Any chance that UAL/AA will follow Starbucks and switch their Red Carpet/Admiral Clubs from t-Mobile to ATT?

[Editor's note: Doubtful. All separate relationships of long standing. American just switched from charging for T-Mobile (or letting them charge) to providing it free for their club members, but still operated by T-Mobile. -gf]

Do you know how this will affect overseas Starbucks locations? In Europe, t-Mobile has been the provider but it imposes an 18 cents/min surcharge on US-based t-Mobile subscribers.

[Editor's note: No effect there. T-Mobile USA is separately organized from its overseas operations. There's a pan-European T-Mobile hotspot group that has a for-fee roaming arrangement with its US counterpart. -gf]

...or for those of us on the West coast, you could just go to Tully's, which offers free, open WiFi.

I think you're wrong about U-Verse being AT&T's DSL offering.

U-Verse is AT&T's fiber optic offering (a la FiOS)

[Editor's note: Thanks, and corrected. The service is free to nearly all DSL and all fiber (U-Verse) subscribers.--gf]

I've seen a top ten wireless myths which said wifi rated speed is only 10-20% of actual. If that is true, then how can you suggest Wlan in a few mins for a movie?

[Editor's note: Please cite your source. 802.11g is rated at 54 Mbps; I have consistently tested (as have MANY others) speeds at 20+ Mbps. 802.11n's current flavor maxes out at 300 Mbps raw in 5 GHz with wide channels. I was able to push 140 Mbps unidirectionally (Wi-Fi to wired) over this in testing. Others have seen similar numbers depending on parameters.

If it were 10 to 20 percent, Wi-Fi would be an also-ran technology thrown out in 2003.-gf]