AT&T Nabs Wi-Fi Perks at Starbucks

Posted by: Olga Kharif on February 11, 2008

Today, my colleague, Bruce Meyerson, is guest-blogging on Tech Beat. Here’s his entry on AT&T’s Wi-Fi announcement:

We should have known something was up when Starbucks took a central role in Apple’s launch of the iTunes Wi-Fi Music Store, inviting iPhone users (a.k.a. AT&T subscribers) to connect those devices to T-Mobile wireless hotspots for free at the coffee chain’s stores.

Well, now it’s all suddenly crystal with the announcement that, starting this spring, AT&T will be replacing T-Mobile as the official Wi-Fi provider at Starbucks stores, with all 7,000 locations expected to be switched over by the end of 2008. Notably, in bowing out of the Starbucks relationship, T-Mobile says it has cut a deal with AT&T to enable its Hotspot customers to continue to use their laptops and mobile devices at Starbucks for free.

Wi-Fi has been core strategy for T-Mobile, the only major U.S. mobile carrier without high-speed cellular Internet access. Of course, T-Mobile has spent billions to plug that hole, buying a chunk of new wireless spectrum in a federal auction for a high-speed cellular network that will launch this year. But the company has never indicated that it planned to retreat from Wi-Fi. In fact, well after the auction investment, T-Mobile rolled out a new service that lets calls on special mobile phones switch back and forth between cellular and Wi-Fi networks.

What all this adds up to, then, is a simple contract loss for T-Mobile and a major new commitment by AT&T, which until now has seemed to approach the Wi-Fi market with one foot in and foot out. Though the company's public Wi-Fi hotspots in the U.S. already numbered 10,000, including McDonalds and Barnes & Noble locations, the service hasn't been nearly as prominent in the company's marketing as it has been for T-Mobile.

While AT&T does dangle its Wi-Fi service as a freebie to many of its residential DSL subscribers, the company doesn't currently offer its wireless customers any packages of cellular and Wi-Fi service. AT&T now says this will change "in the future," but offers no further details.