Tuesday, February 12, 2008

Free Wi-fi: Coming soon to a Starbucks near you

Is the end of paying for Wi-Fi near?

By Michal Lev-Ram

You know the feeling: You just ordered your carmel machiatto (extra foam), sat down at a table and opened up your laptop. You log on, hoping to quickly check your e-mail, when all of a sudden a screen pops up asking for your name and credit card information. That’s when you realize that hopping online won’t be as quick — or as cheap– as you’d hoped.

Say goodbye to all of that. On Monday Starbucks (SBUX) announced it was dropping T-Mobile’s (DT)’ s $6-an-hour Wi-Fi service for AT&T, which will provide coffee- house customers with two free hours of Internet access a day. With about 7,000 Starbucks locations in the United States, that’s a major boon for AT&T (T). Now the question is, how long will hotels, airports and other venues be able to continue charging sky-high fees for a service that many people see as essential as running water and electricity.

“This is something that people want,” says Morningstar analyst John Owens. “I think customers will embrace this move.”

Of course, Starbucks’ hopes free Wi-Fi will convince coffee drinkers to not only opt for Starbucks but also to stick around longer and buy more lattes. To log onto the company’s new Internet service, customers will need to have an active Starbucks card.

“This is what customers have been asking for,” says Starbucks spokeswoman Sonja Gould. She says a typical Starbucks Internet customer uses one hour of Wi-Fi a day. The company will begin rolling out the new service at select locations this spring. By end of 2008, it will be available at all Starbucks’ U.S. stores.

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