Much is being made this week about Starbucks dumping T-Mobile as its Wi-Fi provider and signing on with AT&T in a deal that will result in limited free Wi-Fi access for its customers. I’ve seen a few blogs that have gone so far as to declare this traditional hotspot model an innovative substitute that can fill the gap left by EarthLink in the drive to promote city-wide public access Wi-Fi. Let’s just call those folks ‘starstruck by Starbucks.’
I’m a huge fan of hotspots. They’ve served me well over the years but, let’s face it, this model is not new, nor is it innovative, nor is it likely to fill any gap other than the one created when T-Mobile was shown the door. It is also not “free” but predicated on purchases.
Starbucks, you may recall, pioneered the ideas of using Wi-Fi availability to bring customers in the door when it launched its partnership with T-Mobile six years ago–and, for that, the company deserves high praise. Since that time, however, other venues have gotten on board with the idea of using Wi-Fi to drive customer traffic. IMHO, Panera Bread now does it better, much better, than Starbucks. Their service truly is free. You can arrive and connect with no purchase required. On the surface, that doesn’t seem to do much for driving traffic but it’s brought me through the door at Panera countless times when I otherwise might have gone to Starbucks. I almost always seek refreshment while I’m there and I rarely leave without taking home a loaf of sourdough.
Glenn Fleishman at Wi-Fi Networking News has a detailed account of how Starbucks new ”free” approach will operate. In the best account I’ve seen of it to date, he explains: “The press release from Starbucks and three conversations I had with them yesterday finally made clear what the free 2-hours access requires. You need a Starbucks Card—not their Visa card, which will also work, but their stored-value card that you can recharge. These are available to buy with a minimum fill of $5.00. Once you have the card, free Wi-Fi service is activated by a single purchase of any amount on the card each month. ”
At a minimum, Wi-Fi access at Starbucks will cost you the price of a cup of coffee. For Starbucks, that is probably as it should be. There’s really no incentive for the company to promote traffic that doesn’t pay off in purchases. But let’s not tie the merits of this marketing strategyto the debate over the availability of broadband–the real availability of broadband–in the U.S.
Uh, Starbucks, you may recall, did *not* pioneer using wifi to bring customers in the door. In our town of Portland Oregon, *free* (to the end-user) wifi in coffee shops, bars and bookstores had become the norm well before Starbucks wandered along with their T-Mobile deal. Because it makes sense. The ongoing costs of providing free wifi for customers is very low. Local owners immediately recognized the benefits, not only directly to their bottom line due to “butts in chairs”, but indirectly in being friendly to their neighbors and being part of a community and engendering good feeling. News flash: that’s good for business. It was long before I got involved, but the Personal Telco Project was largely responsible for helping businesses see and do that in Portland.
Oops, you’re right Rus. I should have qualified that to say “the first major national franchise” to do it. Starbucks, you’ll recall, got an awful lot of PR mileage after making the move. Thanks, btw, for your additional comments on just how inexpensively these free hot spot service can be provided. Starbucks, of course, was under contract with T*Mobile to charge for the service (actually, Starbucks was little more than the venue through which T*Mobile provided it) but, competitively speaking, I always thought a truly free model would have made a lot more sense.
Carol, I agree with you about how retailers can — and do — benefit from the free WiFi model in their stores. A great example is Panera Bread, a nationwide chain of more than 1,000 restaurants that offers free WiFi. There is no question this is a competitive advantage for them…it not only brings people in the restaurants, but it keeps them there (more coffee, more snacks, stick around for lunch meetings, etc.)