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.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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