Free Wi-Fi in the brew for Starbucks

Starbucks changed the face of public-access Wi-Fi Monday by picking AT&T to be its new in-store service provider and making its previously for-fee service largely free.

AT&T replaces longtime provider T-Mobile USA and brings with it 17 million of its customers who will pay nothing additional for access. The new service will also be free for two hours a day to anyone who has and uses a Starbucks card.

Financial terms of the AT&T and Starbucks deal were not disclosed.

Starbucks said this move would let the company provide customers with location-specific information, more "digital experiences," and a sense of community online in each store.

While free Wi-Fi has been available in independent cafes or smaller chains and in a few airports around the U.S., nothing of this scope has taken place to date.

It comes after the number of handheld devices in people's hands bearing Wi-Fi radios, including the iPhone, dramatically increased last year.

The move not only makes Wi-Fi attractive to more people but it could also make music and videos available in a bigger way in the coffee giant's artificial living room.

For Starbucks, it could also mean a boost in its in-store business, a business that's taken hits of late.

On the other hand, the change is something of a setback to Bellevue-based T-Mobile USA, which has provided its T-Mobile HotSpot service at Starbucks for six years.

The service charges by the hour, day or month; current monthly subscribers will be able to use the AT&T service without charge.

"Committed" to HotSpot

In a prepared statement, T-Mobile said, "The company remains fully committed to its HotSpot Network." The company operates Wi-Fi in about 2,000 other sites, including San Francisco and Los Angeles' airports, dozens of airport-club lounges, and FedEx Kinko centers.

T-Mobile has consistently declined in the past to disclose its number of HotSpot subscribers or revenue, and declined further comment Monday.

Chris Bruzzo, Starbucks chief technology officer, said Internet connectivity is a "core part of the Starbucks experience." He said the company views expanded Wi-Fi more broadly than enabling access to more laptop and smartphone users, noting Internet access for gaming devices and cameras as examples.

"The reality is that Wi-Fi is simply becoming more important in people's lives, especially in a mobile society," said Joe Izbrand, a spokesman for AT&T. "There's a greater connection to literally having the world at your fingertips."

7,000 stores ahead

Bruzzo said Starbucks will begin rolling the service out this spring and aims to have it available in its more than 7,000 company-operated domestic stores by the end of the year.

He said the service would begin with major metropolitan areas.

The deal is less of an abrupt change than appears at first glance. Starbucks has a 10-year relationship with AT&T and its predecessor companies for back-office services, including point-of-sale operations.

And T-Mobile and AT&T have separately cut a roaming relationship that allows T-Mobile HotSpot subscribers to continue to use Starbucks locations after the transition.

No hint of the deal emerged in advance of the announcement, which pairs two Apple partners together. AT&T is the exclusive reseller of Apple's iPhone mobile device, and Starbucks launched a branded iTunes/iPhone partnership in stores with Apple in 2007, starting in Seattle and New York.

Keeping customers happy

Bruzzo made it clear that Starbucks and AT&T didn't intend to stop at just offering a pipe to the Internet.

"Think about us broadcasting Web services across that signal, broadcasting highly specific information about where that store is, making it possible to be located on a map," he said.

AT&T's Izbrand characterized the amount of free service that this new partnership would offer as part of the company's interest in keeping customers happy — and keeping them as customers — in a competitive telecommunications landscape.

The deal transforms a somewhat static hotspot situation in the U.S., where AT&T and T-Mobile controlled the two largest networks, and dozens of smaller providers operate numerous networks.

Except at its airport locations, T-Mobile had always resisted no-fee roaming across networks that allow subscribers to use competing services. When it did allow such agreements, it was limited to trading access with other providers of airport service.

AT&T has resold access to its locations to dozens of partners, including Boingo Wireless and iPass, which offer unlimited roaming in the U.S. and worldwide across many operators' Wi-Fi networks for set monthly fees.

The Wi-Fi hotspot industry could be affected by the Starbucks/AT&T deal, because it essentially makes Wi-Fi free for at least two hours a day for most customers.

Glenn Fleishman writes the Practical Mac column in the Personal Technology section.

Information from The Associated Press is included in this report.