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T-Mobile Sues Starbucks Over Free Wifi

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What do they say – one man’s meat is another man’s poison. Looks like that was for T-Mobile USA that has filed a lawsuit against Starbucks, which had recently switched over from T-Mobile to AT&T.

AT&T offering free WiFi at Starbucks locations is putting the hurt on T-Mobile’s WiFi business, prompted the lawsuit. (Hey Ma Bell, thanks for listening to our suggestion about free Wifi. ) At the time of the original WiFi announcement all three parties – Starbucks, T-Mobile and AT&T – made polite noises about getting along and impacting each other’s business.

Even though, only two markets (San Antonio, TX & Bakersfield, Calif.) have switched to AT&T, T-Mobile is chagrined that Starbucks & AT&T are offering a free WiFi promotion. ( Rest of the Starbucks’ stores still use the T-Mobile network. As a result the free offer breaches most of the agreements put in place between the three parties.

“Our wifi business is a key component of our strategy as we are looking at it to build our [email protected] offering,” Peter Daobrow, spokesperson for T-Mobile said in conversation this morning, The company plans to have about ten [email protected] devices by end of this year. He wouldn’t say how much his company is going to lose because of Starbucks actions. “After six plus years of our relationship this was quite a disappointment. They didn’t involve us even though it does impact us financially.”

The fact that a coffee seller has become a key pawn for two telecoms is amusing. First, the free WiFi is vital for AT&T, which might be facing the worst kind of network usage with the launch of 3G iPhone. They need to offload as much traffic off the 3G network to WiFi networks, whether at home, work or at Starbucks. T-Mobile on the other hand seems to make a considerable amount of money from its WiFi network, which also compensates for its current lack of 3G network. [Full lawsuit embedded below the fold.]

Read this document on Scribd: T-Mobile Vs Starbucks Lawsuit

22 Responses to “T-Mobile Sues Starbucks Over Free Wifi”

  1. Nick Barron:
    I had the same experience, but didn’t get near as far as you did. Using FF3, IE, and Safari on my Dell EVERYTIME I tried to open my browser my browser would freeze. Then, to access Internet from anywhere else, I would have to restore my computer to a point before I went to Starbucks. I tried this at THREE different Starbucks’ and all gave me the same experience. It doesn’t happen at home or other coffee shops – its just there.
    I waste 2 hours yesterday trying different coffee shops!

  2. nick barron

    Just came from a Starbucks where I was going to try their “free” wi-fi for the first time and, possibly, see if I would become a Starbucks customer once again.

    I knew my experience wasn’t going to go well when both Starbucks employees couldn’t explain how the wi-fi promotion works. “I think you get one of these cards and they might give you Internet on it or something.”

    After I purchased the card, I tried for 15 minutes and three restarts of my browser to register the card, which I thought was all I needed to do to enjoy my “free wi-fi.” Once registration was complete, I then clicked the link that said “Already in a Starbucks store? Click to sign on.”

    So I clicked and then was taken back to the landing page you’re directed to when you first open your browser in a Starbucks. This page had no direction for someone looking to use their Starbucks card to log onto the wi-fi network.

    I clicked here, and I clicked there, and I restarted my browser a couple of times since it kept freezing (I’m using FF3), all to no avail. After 30 minutes of my time wasted trying to use the “free” wi-fi, I finally closed my MacBook and closed the door on me ever being a Starbucks customer.

  3. Starbucks has been hurting not only because of the recession, but because free wifi is becoming ubiquitous. It’s freely available at Panera Bread shops– and thousands of other locations throughout the country.

    Wifi has to be free for Starbucks to compete. They have no choice.

  4. T-Mo should sue, that’s a major part of their business (especially now with [email protected]), and it was kind of shady for Starbucks to switch like that and then even break their own agreement…

    T-Mobile has the best international roaming now because of [email protected]… In fact, I was on a cruise ship and connected to their wifi for the 40 cents per minute and was able to make a phone call… pretty nifty. Not to mention, if you find wifi (like McDonalds) internationally… international roaming is FREE… that’s pretty much the best international I can imagine…

    but, you’re right, I would like to see them give a good price if you’re on, say, DT in Germany… it’s their own network, so why is it a buck a minute?

    Anyways, more power to T-Mo for suing

  5. I think T-Mo should be worried. One of the reasons I became a T-Mo customer (and signed my family up) was the ubiquity of Startbucks and thus T-Mo hotspots.
    With the change over to AT&T I no longer have a compelling reason to stay with T-Mo.
    If I want 3G then I’d go AT&T. If I want an iPhone2 I’d go AT&T. If I want better coverage I’d go AT&T. With one smart move AT&T have made T-Mo pretty uninteresting to me.
    Sure, T-Mo have the Shadow (which is an awesome simple smartphone) but AT&T also have some great Windows Mobile devices so I can stick with the platform I like.
    If AT&T prices match T-Mo when contracts expire…

    Of course there are other carrier considerations, but until the day one of them works out how to do international roaming without price gouging (T-Mo, Verizon – you both have overseas affiliation so why not make it easy and affordable) though with Skype and Fring etc do I really care…

  6. Andy Mesa

    I agree that AT&T should be sued as well, it’s pretty shady of both companies to be pulling the wool over T-Mo’s eyes like that. I mean it’s great for consumers, but it’s just shady to be offering free services on T-Mo’s infrastructure.

  7. I’m glad to know that AT&T is only in a couple of the markets, and in places I’m not likely to go. I’ve yet to use my free T-Mobile access, and the news that Starbucks was switching made me wonder if I’d ever get the chance.

  8. The most interesting part of this lawsuit is that T-Mobile is only suing Starbucks and not ATT – especially considering one of the counts is inducing ATT to breach the agreement.

    The other interesting point is that if T-Mobile is successful, they would have to prove damages. In doing so, they would have to provide a public look at the profitability of the Starbucks arrangement. Since that arrangement is going away regardless of this lawsuit, the bottom line effect of the loss would become public knowledge. So winning the lawsuit would have a price. Also, T-Mobile will take a public relations hit as being a greedy grinch if they are successful.

    So this suit will probably be settled