T-Mobile Sues Starbucks Over Free Wi-Fi Deal

Glenn Fleishman writes "T-Mobile sent me the text of a lawsuit they filed yesterday against Starbucks. The telecom firm alleges that Starbucks didn't involve it in any discussions to launch their free loyalty program Wi-Fi service this week with AT&T. AT&T is gradually taking over hot-spot operation from T-Mobile, market by market over the course of 2008. T-Mobile told me Starbucks is essentially giving away something that isn't theirs. T-Mobile has sued to halt the two-hours-a-day of free service, and is asking for money to cover losses. This might sound like sour grapes, but T-Mobile still operates most of the network, and says that the terms to which they agreed with Starbucks and AT&T for the transition and with AT&T for bilateral roaming don't cover this situation at all. Maybe free access in exchange for buying a cup of joe every 30 days was too good to be true (this soon)."

Comments

Hmmm

[Thyamine]

Maybe I don't understand, but if Starbucks is already paying them for having the wifi service, why can't Starbucks give it away/charge for it as they like? Did the original agreement require Starbucks to charge each user on behalf of TMobile or something?

Re:Hmmm

[austexmonkey]

'Thanks' for the 'explanation'. I've often 'wondered' how 'free wifi' 'worked' in 'restaurants' and the 'like'. I 'find' it surprising that 'satellite' is still used for 'inventory' 'systems'.

Re:Hmmm

[Zero__Kelvin]

"Maybe I don't understand, but if Starbucks is already paying them for having the wifi service, why can't Starbucks give it away/charge for it as they like? Did the original agreement require Starbucks to charge each user on behalf of TMobile or something?"

Wi-Fi through T-Mobile is known as Wireless Hot Spots, and users do not pay Starbucks, they pay T-Mobile. Presumably Starbucks pays T-Mobile something under the theory that the access brings more customers. (Actually, that theory is true, as I have bought numerous Grande Cafe Mochas that I would not have otherwise purchased, because I decided to go to Starbucks instead of some other CSP (Caffeine and Sugar Provider) for the T-Mobile Hot Spot access.)

They can't give it away or charge for it as they like because they didn't purchase the infrastructure; they have a contract. ObCarAnalogy : If I buy a car from a rental company I can do with it what I wish within the bounds of the law (and optionally physics.) If I rent a car I cannot let whomever I wish use it and charge them as I like.

Disclaimer: I may have the law and physics part mixed up a bit. I forget which one is real and which is imaginary. Teh Maths are not my strong point :-)

Re:Hmmm

[Anonymous Coward]

the problem, is that starbucks rolled out this wifi thing in 2002, and instead of putting in highspeed internet in each and every starbucks, they put in a wi-fi access point that relayed the data over a cellular network. Incorrect. TMO pulled T1's into virtually SBUX for backhaul. This is one of the reasons TMO could charge a premium. Not sure where you got the cellular idea.

Re:Hmmm

[Ugliarch]

I'm not sure that's quite true. As a technician for tmobile, I have been involved in setting up many tmobile hotspots and each one has been some sort of T1 connection to the site.

Re:Hmmm

[Anonymous Coward]

Yup, you are correct, I consulted for initial deployments in some markets. TMO is footing the bill for the free AT&T/Starbucks usage.

If Starbucks so choose to have free access then the terms of the agreement require them to pay for the service out of their marketing or operating budget. Right now the free service with a drink/starbucks card is NOT being payed for to the provider, T-Mobile. That is what the beef is about.

TMO agreed to a proper transition with free services to be handled by AT&T once the full equipment handover occurred.

If Starbucks wants to offer free service before the full cut over, then AT&T needs to be paying T-Mobile for the usage.

Remember there is a revenue agreement in place through 2009 where T-Mobile is the CURRENT provider until all the hw is moved over to AT&T.

Make sense folks?

sent text?

[Anonymous Coward]

T-Mobile sent me the text of a lawsuit they filed yesterday

Just wait, they'll charge you 50 cents for that too.

Free wifi should be universal

[teslatug]

I still don't get why every coffe place doesn't have free, unencumbered wifi access to everyone. It's a great way to get more customers. I always check if there is a free wifi before getting coffee some place. It won't cost them more than a few cents per coffee, which they could easily hide in their 3,4,5 dollar beverages. It boggles the mind.

Re:Free wifi should be universal

[stickystyle]

Freeloaders that never will buy coffee.

Don't tell me that's not obvious to you.

Re:Free wifi should be universal

[ScentCone]

I still don't get why every coffe place doesn't have free, unencumbered wifi access to everyone

For the same reason that the people who DO provide it without any connection to a transaction end up having all of their seats taken up by non-customers, and have to put up notices begging people to limit their use of the system during their peak business hours.

I've had reason to pick sit-down-for-coffee-and-a-pastry places several mornings in the last couple of weeks. Within a couple hundred meters from each other: a Barnes & Noble, which uses AT&T for their $3.99/two-hours deal, Starbucks (which uses the above-mentioned, much more expensive T-Mobile deal), and a Corner Bakery Cafe, which loudly proclaims via storefront window stickers that all of their cafes now have free WiFi. Yes it's free, but it's intermittently wonkly, slow slow slow, and clearly wanders through a laborious proxy (just like the free service at Panera).

There's outside seating at the Corner Bakery. Every morning and lunchtime it all fills up with people from the local office buildings. They walk in to Starbucks for the better cup of coffee, and then walk over to the Corner Bakery and sit down to use the free wifi. If I were managing that store, it would piss me off. As a customer with the decengy to give the Corner Bakera $3 and change for some eggs on toast, it pisses me off to have less use of the pipe because other people are hammering it (this morning, five people sitting outside onlone: one was streaming YouTube, and one was video chatting (badly). But what are they going to do, burn good will with people who might, one day, actually buy a sandwich from them, by running them off? So, the leeches win, and the actual customers they're hoping to attract lose. I guess they could put in six nodes and an OC48.

The same local Starbucks couldn't possibly seat the number of camp-out road warriors who would hog their pipe if it were free to all. At least if you couple the use of the wifi service to the purchase of their served products, there's something redeeming in offering the service... and less of a need to run of the leeches.

Re:Free wifi should be universal

[Lumpy]

2 of the smaller coffee shops around here with free wifi solved that.

you have a code on your recipt. that code is entered into the nocatauth screen to give you access.

It's brain dead easy to do with IT people that know what they are doing. Maybe starbucks needs to hire competent IT people?

Re:Free wifi should be universal

[Savior_on_a_Stick]

The problem is that your local Mom & Pop cafe isn't managing their wifi properly.

Our cafes all offer free wifi, and it will always be free, and not tied to transactions.

I was dragged into a Starbucks once a couple of years ago.
Annoyed the crap out of me that I would have had to pay for wifi.

I just upgraded one of our locations to 16/2, and another will get upgraded next week.

I monitor usage to weed out activities that that can cause us liability - but that's about it.

We've received two dmca letters to date, which caused me to go OpenDNS to block the p2p websites and I block unencrypted p2p at the router. The only dns block categories I use are p2p and phishing sites.

Am I blocking the ability of someone to download the latest Ubuntu distro?
Only if they are running unencrypted. And if they do hit a blocked site, customers are given a page telling them why and email and phone number are listed if they have any questions or concerns.

I've had zero calls/emails so far.

Our strategy may not work for everyone, but I like to think we have a better class of customer than most cafes.
Certainly much higher than the mouth breathing foofoo coffee denizens of Starbucks.

$95 a month is cheap to ensure a fast, reliable connection.

Re:Free wifi should be universal

[Savior_on_a_Stick]

I was explaining what I do - not offering a solution.

If I had a problem with a couple of bandwidth pigs, I'd first try publically disallowing high bandwidth activities that I truly don't want - ie: unencrypted Bittorrent.

Next would be to use proto based qos and drop high bw protos to the bottom of the heap.

Following that would be to isolate any individual troublemakers and use mac based qos to slow their connection to unusability.

There are *lot* of things that can be done to discourage certain types of usage.

Again, I likely have a better class of user than most cafes, so it was a trivial matter to trim out the unwanted usage.

If this is beyond the means of an individual cafe owner, it is easy to get help.

Most localities of any size have some sort of volunteer group dedicated to ubiquitous free wifi.

We have a group here that will go so far as providing the ap and supporting it as long as the owner springs for the internet connection. I've even seen them arrange a sponsor to pay for the connection in key areas where there are no existing free ap's.

If the issue is one of simply too many freeloaders physically crowding out the paying customers, then, yes - you have a thorny problem if the cafe operators are technically challenged.

We have a pretty tightly knit community and this has never been an issue, other than the cars in the lot sucking up free wifi in the wee hours of the morning. And even those are merely a curiosity. They don't displace paying customers. I suspect they are too embarrassed to occupy a seat without making a purchase.

I'm glad we have such a community. I can walk into the cafe - announce that I need to reboot the router, and my customers have no problem asking me to wait a few minutes while they finish a quiz for their distance learning class. They have no problem approaching me about issues connecting, etc.

And I'm not even in the cafes that much, other than to grab some nice french pressed single origin to start my day.

Maybe I'm just lucky that my employer knows what he's doing, and our customers are generally fiercely loyal and wouldn't do anything to damage the community we enjoy.

Every day I wake up happy to go to work, and consider myself fortunate to be well paid to do what I would be willing to do for free.

Lawsuit happy..

[WhatAmIDoingHere]

These are also the people who tried to copyright the color magenta. They also have sued at least two companies that I know of over 'their' color.

Maybe these lawsuits are the last flailing movements of a dying beast.

Re:Lawsuit happy..

[TheoMurpse]

Trademark, not copyright. Here. I don't really care about the merits of T-Mobile's claims, but there is Supreme Court precedent saying that a color can be trademarked in certain narrow circumstances (the alleged holder must show "secondary meaning"--basically, that customers associate the color with the brand). Recall that trademark traditionally (and arguably still mostly) is geared towards alleviating customer confusion. In that light, such a trademark might make sense (again, not saying it does in T-Mobile's case, as I don't know anything about it).

See Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159 (1994) for illumination. I disagreed with the concept until I studied the case in IP Law. Now I'm neutral.

Re:hmm

[WhatAmIDoingHere]

Because AT&T threw money at them. The iPhone and Starbucks target demographics overlap heavily.

Re:hmm

[iknowcss]

LOL what's a demographic?

Sent from my iPhone