T-Mobile Sues Starbucks Over Free Wi-Fi Deal 142
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)."
Hmmm (Score:5, Interesting)
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much cheaper than paying $40 a month per location for dsl/cable, assuming each store could even realistically get broadband service.
every place that has 'free' wifi, is a place where they put in high speed internet for their 'inventory' system, and the 'free wifi' piggybacks on that internet
Re:Hmmm (Score:5, Funny)
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There should be a -1: Unable or unwilling to capitalize option though.
Re:Hmmm (Score:5, Informative)
Re:Hmmm (Score:5, Informative)
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much cheaper than paying $40 a month per location for dsl/cable, assuming each store could even realistically get broadband service.
I'm fairly sure this is not correct.
I've looked at my traces and such while in there, and it doesnt appear to be a cellular network, nor does it have the ping times and latency associated with it.
In addition, T-Mobile has been present in my city's starbucks for years before any sort of cellular data service was available here (that could reach 1.5mbps at least).
Next time I'm over there I'll take another look, but I dont think this is correct.
It's possible they do this for some sites where they cant get dsl
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If that were true, then the wifi at SBUX would have been astonishingly slow, considering that TMO doesn't have anything better than EDGE in most of its markets.
Oh, and not to mention that TMO doesn't even have towers in some states and rural areas but relies on GSM roaming agreements, some of which on small carriers that don't have HDR capability at all, never mind included in the agreement.
Granted, they are not technically TMO's
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Nope, not at all.
Initially the TMO hotspots were symbiotic. Everyone that wanted to use SBUX hotspots paid TMO, not SBUX. SBUX got the benefit of offering WiFi without having to actually pay for the work to do it. TMO got the benefit of well-traveled operating locations.
Then, SBUX drove ten miles across Lake Washington to TMO and said "It's not you, its' us. We want
Re:Hmmm (Score:5, Interesting)
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
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
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Re:Hmmm (Score:4, Funny)
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The contract with T-Mobile is set to expire soon, so Starbucks has now gotten a better deal with AT&T to provide free service for Starbucks-card-holding customers, and better rates for irregular ones. This is all fi
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Starbucks has enough control of the network to provide access without the technical compliance of Tmobile.
Notice that Tmobile has not "interrupted" service. It would seem that if TMobile were the provider, their first option in the event of nonpayment - would be to shut down the power switch.
It appears that Tmobile doesn't have command and control of the network.
I wanted to point out that a number of their competitors (Panera Bread being one) have offered
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T-Mobile builds supports/manages the network and infrastructure
T-Mobile charges folks to use the network and then gives x% of that revenue to starbucks (x is probably a fairly small number).
5ish years ago, that looked like a pretty sweet deal to starbucks. They're not in a position to train staff at every store to manage / support the network (not without large cost anyway), so this way they got all their shops kitted out with a useful service for free, plus they
Re:Hmmm (Score:4, Informative)
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?
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This type if
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The phrase you are looking for is tortious interference [wikipedia.org], where someone influences a party in a contract to breach that contract, or otherwise works to prevent a contract being established by two other parties.
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sent text? (Score:5, Funny)
Just wait, they'll charge you 50 cents for that too.
Poor T-Mobile... (Score:2, Interesting)
Why would one feel sorry for t-mobile?
The least one can do is investigate for possible price-fixing between operators of paid Wifi services.
The costs to run a public WiFi service are pretty low (considering that all software is available as open-source, so no licensing fees).
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Really? I find that they're usually cheaper than competing services.
Do you have an example of "exorbitant fees"?
Re:Poor T-Mobile... (Score:4, Interesting)
Ignoring that, the cost to run a public WiFi service isn't all that low if you want the ability to actively montior, track, and maintain the network. Yes, there's open source software available. How much of it is designed for centralized management of a 10,000 node public wifi network?
Even more than that, you've got the cost of the internet service (e.g. T1 lines to each hotspot). Even if you went DSL, the cost for DSL/Cable to a *business* is far higher than the $20/month promo-deal you found on fatwallet.
Could i run a single hotspot in a local coffee shop for low enough cost to give it away? Sure. Can you run one in every starbucks with 24/7 monitoring, status, and low down time for free? No. There's cost in there somewhere that has to be made up.
In case you haven't noticed, ATT is throwing money at ever opportunity they can to build customer base. The iPhone and Blackberry Bold are good examples. I doubt they'll ever disclose how much they paid for those contracts, but it's huge. How long this game will last is anyone's guess.
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In addition, the quality of service of the wifi at Starbucks is excellent.
I've been to so many 'free' wifi spots where the wifi was down alot, or just so badly managed and/or congested and/or oversubscribed that it was useless.
I'd rather pay a few bucks a month and have something that 'just works' than have to roll the dice each time I sit down at a coffee shop.
$10 per day (Score:2)
That's $300/month or 6-10X what one pays for at home.
Those are the hotels I have been staying away from.
As for Starbuck, even paying $100-200/month is miniscule compared to their marketing expenses. Is it worthwhile to drive away customers to save $100-200 a month?
The only benefit that I can see is limiting the time people can use the internet. That way, the tables would not be hogged by people who spend all day in there and buy 2 drinks and woul
hmm (Score:2)
Re:hmm (Score:5, Insightful)
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Just thinking about that demographic makes my skin crawl...
Re:hmm (Score:5, Funny)
Sent from my iPhone
Free wifi should be universal (Score:5, Insightful)
Re:Free wifi should be universal (Score:4, Interesting)
Don't tell me that's not obvious to you.
Re:Free wifi should be universal (Score:5, Interesting)
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?
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it's ridiculous to think that people are going to pay another $30 a month for wifi.
Alot of people do. T-Mobile made alot of money in that deal.
I pay for it (rather my business does) because its so damn convenient.
I also have a Sprint EVDO RevA card, but I tend to use the t-mobile at starbucks alot more because:
1. There's always one just right down the street.
2. The quality of the service is excellent, and its NEVER down.
3. It's much faster and lower latency than my sprint card.
All that being said, you're right in that its not a reasonable deal for casual users. But a business offeri
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It works on the theory that you'll be too embarrassed to sit there freeloading and getting a new card every half hour for 4 hours in a row. In Swiss culture, for the most part, that works. I'm not so sure it'd fly back home in Chicago.
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I have also heard of women who are giving away free sex! every time you buy them a mink coat.
(The parent doesn't mention Mickey D's, but they have been doing this for quite some time now as well)
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they provided free wifi, no strings attached. no codes, no log-ins, no purchase necessary, just bring your laptop and enjoy free internet.
I once asked them why they don't charge or limit the internet. their reason was simple. 'running wifi is dirt cheep, the only expensive part is setting up and maintaining a system for charging customers to use it. and if you want to be competitive, the price is so low the profit you make on
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It's got to be monitored, maintained, etc. You've got to have folks on standby to deal with it when it breaks.
You have to have engineers and software folks integrate the POS software with your wifi management software.
You've got to deal with software updates, hardware updates, hardware failures, line failures, attacks, spamming, and over-use.
The second you do anything but put it up and say 'enjoy it if it works', it becomes tremendously expensive.
But if you d
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The thing is that once most places offer free wifi, not having it is a disadvantage.
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You would think so, but there are market oddities that I've never been able to grok.
Seattle is one of the more unwired cities, yet charging for wifi is the semi-accepted norm there.
Portland, while arguably the most unwired, has an environment where charging for cafe wifi is culturally unacceptable. Starbucks still charges for it here, but being a corp controlled entity that receives marching orders from distant overlords, they really don't count.
So, in some markets, charging for wifi may make business
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Sure it may not be the top 1% connoisseur level, but its a step above all the crappy mom and pop shops around.
The vast majority of independent coffee places make bland, tasteless coffee, and dont have a clue of the difference between good and bad.
At Starbucks, if you go it may not be the best of the best, but its usually going to be a cut above most things around it, and have a huge selection, insanely friendly and helpful staff, clean stores, and quality wifi.
If you go to the big cities, s
Re:Free wifi should be universal (Score:5, Interesting)
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.
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Re:Free wifi should be universal (Score:5, Interesting)
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.
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How so? All you've done is advocate the removal of all restrictions on a network. How does that solve the problem listed in the post you're responding to, that of too many non-customers using too much bandwidth?
Re:Free wifi should be universal (Score:5, Interesting)
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.
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That's all fascinating and useful information. But honestly, that's technically beyond half the slashdot readers, much less people that run coffee shops. Certainly there's a lot of slashdot readers who can do this stuff in their sleep, and of course they will be the ones to respond to this message and tell me what a retard I am, and how simply everyone is a network specialist except for me. I am fairly technical, but networks aren't my specialty. If I wanted to do even half the things you listed above, i
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Re:Free wifi should be universal (Score:4, Interesting)
I admit that I don't really know the exact problems faced by these coffee shops, but assuming it's as simple as non-customers using up tons of bandwidth then why not print the WPA key on the receipts and change it each morning ? If you don't want to tie Wifi to a transaction then write it on the menu and make it so it's not visible from outside the coffee shop. That way you at least get people inside of your store, and business 101 says that getting people in the door is the first step towards making a sale. And lets face it, coffee shops are there to make money. If people are physically entering the store and sitting down at a table to use Wifi and not paying for anything then there's no reason not to ask them to leave. I mean restaurants and strip clubs don't have a problem asking non-paying customers to GTFO. Why is it different for coffee shops ?
As for bandwidth hogging activities I don't really see any reason NOT to block bit torrent and p2p etc. Letting people surf the net and check their e-mail over a coffee seems, to me, to be the real reason to offer Wifi. Torrents and p2p don't just hog bandwidth they can create potential liability for the business. So while the GP didn't necessarily offer any solutions to big chains I have to agree with him that any coffee shop running into problems isn't managing their network properly.
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Unless you've got a fantastic location in a high traffic area where people have money, coffee shops are fairly low margin.
Reading this post and the post below, you've got to be running at least $1000 a month in monitoring and consulting bills (equiv I know since you're doing it yourself).
But most shops dont have people like you in them, and hiring people (like me) is going to cost money. This level of cost will just wipe out most small
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Free wifi for customers? Sure. Do it like this... (Score:2)
Print a one-time key good for half an hour after the purchase on the receipt. Let people pay for longer-listing keys at the register. You'll get some yobboes dumpster-diving for keys, yes, but it'll discourage most of the leeches.
The reason that "fo
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I don't remember what the last place I used paid Wifi service at was, but it had a per-day and per-hour program, so you could pay just for the time you used... but you still had to sign up online.
I don't understand what part of "don't make it hard for people to give you money" these people are missing, but boy are they m
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Corner Bakery has free wi-fi now? Sweet! I'm going to have to check that out.
By the way, if it works anything like Panera Bread's system, web browsing can be made a LOT faster by tunneling to your own proxy at home instead of using theirs.
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Granted, the company I work for is just large enough to employ me as a 3/4 time net admin, but any independent that doesn't have their own IT structure could easily have their isp set it up.
I spend maybe an hour a week per ap peeking and poking, but that's only because I'm around anyway.
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Starbucks can afford it (Score:2)
Nice idea but it doesn't work - the wifi costs to maintain, and someone has to pay for that.
OK. Starbucks made approximately $672 million [yahoo.com] in profit during 2007. They also had approximately 8500 stores during that time. Assuming it costs in total $100 per store for wifi, That is still less than two tenths of one percent (0.2%) of Starbucks profit for 2007 alone. Somehow I don't think that will break the company...
I doubt your figure (Score:2)
100.19 per MONTH covers my highspeed COMMERCIAL connection from comcast
which I am not allowed to use to supply wifi to the public
I do anyway
I've never asked what the fee would be for a connection where I am allowed to do so.
now-- imagine a starbucks where commercial cable modems aren't available, and a T-1 is required.
100 per store won't cut it..
The figure is an example (Score:2)
MEGACORPS have to play by some rules little guys don't
100.19 per MONTH covers my highspeed COMMERCIAL connection from comcast
which I am not allowed to use to supply wifi to the public
Yeah, they get negotiating power and economies of scale. 8500 stores gives a LOT of negotiating leverage. A company I used to own paid $250/month for a shitty speed connection but we had no negotiating options as there were no competitors available. Starbucks isn't in that position.
That said, the $100 figure was just an example. Even if the cost were 5 times that (possible though I think unlikely) it still is less than 1% of their annual profit. The cost of Wifi is a rounding error to Starbucks. I do
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Thats material and noticeable.
And you're just covering the cost of the monthly fees.
Plus hardware, plus setup, then maintenance, then a support system so people have someone to call when it doesnt work, etc etc.
It adds up fast.
The biggest reason why a company like Starbucks wouldnt do it is because its not their core business. It takes some infrastructure, specialized knowledge, and a whole staff to manage a network like this, keep it up, and provide end-user sup
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1% of annual profit is NOT a rounding error.
Thats material and noticeable.
First off, figure of speech. Second off, you're assuming that all costs would be in addition to their current costs - highly unlikely. Third, you are assuming there are no offsetting revenues - if there aren't there is no point in offering the service in the first place. Fourth, $500/month/location (which is the amount to get to 1% of annual profit) would almost certainly be more than it would be worth to any restaurant - their margins aren't that good - so clearly it does not cost that much. Finally y
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you're assuming that all costs would be in addition to their current costs - highly unlikely.
Actually its even worse than that, as they likely get revenue from T-Mobile now, so it would go from a (small) income stream to a large cost.
Third, you are assuming there are no offsetting revenues - if there aren't there is no point in offering the service in the first place.
Any offsetting revenues they're already getting with T-Mobile, so no net change there.
Finally you are assuming no economies of scale which Starbucks clearly would have.
Actually its the other way around. It's alot easier for a single mom & pop store to put up a crappy router & wap and just say, "If it works, it works." A company the size of starbucks cant easily do that. You are correct in that if they did build up a support environment
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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.
You're assuming that they have their own ADSL link to every shop. They don't. They decided to let T-Mobile and AT&T control their networking infrastructure, and the operators are understandably less than thrilled by the free competition.
In other words, they decided to give control of their network to a potentially hostile company, and they're getting what they bargained for.
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Instead, Starbucks has decided to target a different group: business customers. These are people who don't actually pay the $10 connection fee for one-time use; they have Wifi hotspot plans with their Blackberries and iPhones, or their company has access to such a plan. T
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It's amazing how no one else around here gets this.
Lawsuit happy.. (Score:5, Interesting)
Maybe these lawsuits are the last flailing movements of a dying beast.
Re:Lawsuit happy.. (Score:5, Informative)
See Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159 (1994) [justia.com] for illumination. I disagreed with the concept until I studied the case in IP Law. Now I'm neutral.
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The T-Mobile logo is not some lousy magenta, it is Pantone Rhodamine Red!
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A dying beast, you mean a division of Deutsche Telecom? Yeah, the largest phone company in the E.U. must be on their last breath over this.
Huh? (Score:2, Insightful)
Maybe I'm missing something but this sounds like the equivalent of getting a lawsuit from Dominos because I ordered a pizza from Papa Johns instead.
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Contracts (Score:3, Informative)
But does their contract guarantee exclusivity? (Score:3, Informative)
If T-Mobile has no exclusivity contract, then my ruling would be that they are up the creek.
Then again, IANAJ.
Panera Bread Company and McDonalds (Score:2)
I'm at a loss trying to decide who I have less sympathy for--T-Mobile for thinking they can charge $10 for a Wi-Fi connection, or Starbucks for thinking that providing the $10 connection is going to bring in the 'Net-savvy customer.
Panera Bread Company and McDonald's are both offering free (as in beer) Wi-Fi access. In my experience McD's Wi-Fi is not terribly consistent--it appears to depend heavily on the technical sophistication of the local franchise owner. Panera Bread, on the other hand, has been un
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I'm at a loss trying to decide who I have less sympathy for--T-Mobile for thinking they can charge $10 for a Wi-Fi connection, or Starbucks for thinking that providing the $10 connection is going to bring in the 'Net-savvy customer.
You're not understanding the situation.
Hardly anyone at Starbucks pays per-day fees, with the rare exception of someone travelling.
The vast majority of users are on a per-month unlimited plan.
They're professionals and business people, who use starbucks and t-mobile all over the country to get their business done.
They're not trying to bring in 'the net-savvy customer'. They're trying (and succeeding) to bring in the business customer, cause he's got a business who will pay per month fees forever.
Too good to be true? (Score:2)
My local coffee chain has free wi-fi access, no strings attached. You don't have to buy a coffee officially, you might get some stares if you don't. There's not two hour limit or any crap like that. They need the connection anyway for credit card charges and to talk to the home office for inventory and such.
T-Mobile's "$6 an hour, $10 an day, or $40 an month" was just frickin' ridiculous.
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When the wap is starting to fail, or the barista rebooted the network equipment in the wrong order, or when there are too many people on doing p2p and it doesnt work worth a damn.
This happens all the time in the 'free' wifi places I've been to. Whereas with T-Mobile at Starbucks, it always works. It's fast, low latency, and I have someone to call if there is a problem.
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Wait, that's [wordpress.com] not burnt coffee...
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Of all the sit-down coffee shops I visit, Starbucks is the only one that has been charging for wifi over the past two years.
Whats up with that?
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In my experience, a large percentage (ie, the majority) of 'free' wifi spots are down or so slow to be useless a significant amount of time. This is a hassle, and costs me.
Whereas if I go to a starbucks, its always up (4+ years with 100% service for me), and the speed and latency are excellent (1.5mbps synchronous, good latency).
This quality guarantee is worth the $30/month for many people.
You're right in that it DOES suck for the casual user though. Not everyon