Starbucks-AT&T deal could benefit iPhone users

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Starbucks’ decision to tap AT&T to provide wireless hotspots at its retail outlets could pave the way for an expanded, potentially free network for users of the iPhone and possibly the iPod touch.

Starbucks said Monday that it was changing its Wi-Fi hot spot network provider from long-time partner T-Mobile to AT&T. The AT&T-run service at 7,000 Starbucks locations around the U.S. will be available at no cost to the telecommunication firm’s 12 million U-Verse DSL subscribers, 100,000 Starbucks employees, and even T-Mobile HotSpot subscribers.

Two hours of free service will also be available each day to anyone possessing an activated Starbucks Card, a stored-value swipe card used for purchases, even one bought on the spot, according to a Starbucks spokesperson. As little as a single purchase each month of any amount using the card is needed to keep the card active for Wi-Fi use, as Starbucks intends this as a reward to regular customers. The minimum value to load on a card is $5.

Walk-up customers will pay $3.95 for two hours’ access; a monthly unlimited usage plan via AT&T is $19.95. Five million business remote access subscribers will also receive free access under their existing plan.

There’s no word yet on whether iPhone users will get free access to Starbucks’s network; so far, AT&T hasn’t made any special arrangements with its current footprint for its mobile phone customers. Joe Izbrand, a spokesman for AT&T, said, “We don’t have any announcement to make on this at this time. I think you can expect us to continue to evaluate all the options to bring greater access and value to our customers.”

However, given that the vast majority of Starbucks Wi-Fi users will get wireless access for free, it’s unlikely that we’ll see AT&T or Starbucks try to eke out a few dollars extra from iPhone users. iPod touch owners may be in a different situation, because they pay no recurring revenue to AT&T. (iPhone and iPod touch users can get free access by watching advertisements at most of the major airports in the U.S. through an unrelated relationship between Boingo Wireless and JiWire, a hotspot ad provider.)

One way in which Starbucks and the rest of AT&T’s network could be vastly improved for iPhone and iPod touch owners would be to simplify the login. Like most hotspot networks, Apple mobile owners have to tediously enter login information through the built-in Safari browser; this information isn’t cached or stored.

With a more integrated network, an iPhone or iPod touch could be uniquely identified and logged in with no additional effort. Apple, Starbucks, and ostensibly T-Mobile already deployed this in some fashion for the iTunes Wi-Fi Music Store, which is available without paying connection fees at Starbucks locations in select U.S. cities.

One complicating factor is for the person who carries multiple Wi-Fi-enabled devices, like a MacBook and an iPhone. While many networks prohibit simultaneous logins using the same account, a Starbucks spokesperson confirmed that multiple devices, within reason, could share the same account.

AT&T’s current Wi-Fi network footprint comprises nearly 10,000 locations, about 8,500 of which are McDonald’s restaurants the company resells access to. The others include Barnes & Noble bookstores, and a number of smaller chains, as well as a few airports. Starbucks’ transition from T-Mobile to AT&T will start in second quarter of 2008 and be completed by year’s end. AT&T employs Wayport, a Wi-Fi and wired broadband service provider established in the late 1990s, to build and operate its network locations. AT&T resells about 1,000 locations directly operated by Wayport; Wayport is also McDonald’s direct partner for Wi-Fi.

AT&T’s pricing is in stark contrast to the current Starbucks provider, T-Mobile, which charges $6 per hour or $10 a day for walk-up service; $20 per month to its voice subscribers as an add-on plan; and $30 to $40 per month for others, depending on the term of commitment. T-Mobile will continue to operate the rest of its network of roughly 2,000 locations, which includes airline club lounges for American, Delta, United, and US Airways; entire airports, such as San Francisco and Los Angeles; FedEx Kinko’s centers; and a few hotel chains.

T-Mobile wasn’t Starbucks’s first partner; an early Wi-Fi firm, MobileStar, originally signed Starbucks to a contract in 2001. MobileStar filed for bankruptcy after the dotcom crash dried up venture capital, and T-Mobile (then known as VoiceStream) acquired its assets and the Starbucks deal in 2002.

[Glenn Fleishman writes daily about wireless networking at his site Wi-Fi Networking News.]

Updated at 3:45 p.m. to clarify information about the use of Starbucks Cards.
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