T-Mobile Sues Starbucks over Free Wi-Fi

June 9, 2008 By Nick Mokey

T-Mobile Sues Starbucks over Free Wi-Fi

Although T-Mobile will soon bow out as Starbucks' Wi-Fi provider, it claims that in the meantime, the coffee house is giving away its service for free without compensation.

Loyal Starbucks customers may have been delighted to hear that the coffee chain was switching from T-Mobile to AT&T for its Wi-Fi service – and that they would be getting two free hours of Wi-Fi a day as a result – but T-Mobile was understandably not nearly as pleased with the arrangement. In fact, the company has filed suit against Starbucks over the free Wi-Fi deal, alleging it violates existing contracts.

The specifics of the suit stem from the nitty gritty details of the contract that Starbucks entered into when it began transitioning in-store Wi-Fi service from T-Mobile to AT&T. In a copy of the lawsuit posted by Gigaom, T-Mobile claims that the papers give it exclusive rights to peddle Wi-Fi in all Starbucks locations until they transition to AT&T, and at the moment, only two stores, one in Bakersfield Calif. and one in San Antonio, Texas, have actually transitioned fully to AT&T’s equipment. The remaining stores, it alleges, are basically giving away its service for free and without permission.

“Since T-mobile provides the resources and equipment to support Wi-Fi service in non-transitioned stores, it is T-Mobile alone that is bearing the cost and burden associated with this “free” Wi-Fi offer,” T-Mobile writes in the lawsuit. The company is seeking an immediate injunction to prevent the Starbucks deal from continuing, as well as compensatory damages.

Starbucks has yet to publicly comment on the suit, and despite AT&T’s involvement in the free Wi-Fi promotion, its contractual relation to T-Mobile has kept it free and clear of the lawsuit.

Showing 6 comments

Liza at 4:32am 7th January 2009 T Mobile sucks! They're involved in unscrupulous business practices as they're always looking for new ways to cheat customers.
The services wasn't exactly free. You could receive 2 free hours daily only by purchasing a gift card and registering it on line at starbucks.com. It was available to those who bought coffee or gift cards, attracting more people to Starbucks. It's a nice service to offer if you want to attract customers new and current ones alike. And good for business.
smokeonit at 1:44pm 9th June 2008 there's actually a monthly flat rate for tmobile wifi in the US and every other country tmobile offers wifi, like germany... in germany the flat costs â‚¬15/month and in the US i think it's $20 or so... since tmobile offers thousands of hotspots the flat price is actually quite good, but the hourly or daily prices are out of touch with reality...

what att does with its wifi hotspots, tmobile is doing in gemany, they boundle the iphone with a flat for the wifi hotspots... if tmobile would have gotten the iphone deal in the US it would have made sense to continue the starbucks deal... but since there less non iphone users that actually use the internet regularly tmobile is on the losing end in the US... the $$$ is in the iphone deal, not notebook or other smartphones than the iphone...
Rick at 1:28pm 9th June 2008 Way to go T-Mobile. While you should be able to sell your service, it was the high prices you set that stopped most Starbucks customers from using it.

I think that most people are going to view your lawsuit as a dumb thing. You are going to brand your company as a poor loser.

I was traveling the other day, and just for fun fired up by laptop at LAX. I saw your WIFI hotspot, but thought the price was too high for a few minutes of use to check my email and shut down. As you know many airports are now offering the service for free to travelers.
Matt at 10:49am 9th June 2008 I think Starbucks will just offer T-Mobile free coffee for the inconvenience.
Stanley at 10:41am 9th June 2008 No one I know was paying for the T-Mobile WiFi access at Starbucks. It's a joke, every other place offers free WiFi, there is no reason to pay whatsoever.
Jacques Fu at 9:09am 9th June 2008 Perhaps T-mobile has gone a little far to sue Starbucks, but then again, I doubt Starbucks would've complied with the request, or even offered to pay T-mobile for the wireless services until the transition unless T-mobile did something this drastic.

T-mobile should have seen this coming from a mile away, and if they were smart, they would have worked with Starbucks to offer the free service. Now they are losing a big client, and access to a huge customer base.

Jacques
http://www.whitecollardragon.com