T-Mobile Sues Starbucks Over Free Wifi

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 TMobile@Home offering,” Peter Daobrow, spokesperson for T-Mobile said in conversation this morning, The company plans to have about ten T-Mobile@Home 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.]

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