There *is* free WiFi if you're an AT&T DSL customer.

"all devices are eligible for the 2 free hours of access (not just iPhones and iPod touches)"

Yes

So AT&T (or T-Mobile) makes money by setting up and maintaining a free WiFi hotspot... how?

I used to hang out doing work and schoolwork in many of those "dime a dozen" indie coffee shops who gave WiFi away for free, and the good majority of them have all closed up shop now. There are times when it makes sense to give something away for free, and then there aren't.

Letting students who buy $1.50 cups of coffee and mooch off free WiFi for 6 hours—taking up all the seats in the house so actual paying customers don't have anywhere to sit—is a bad idea.

Starbucks isn't in the business of hiring all the personnel needed to set up and maintain a massive network of WiFi hotspots. AT&T is. But the company can't afford to just give all its services away, and even something like revenue sharing from coffee purchases doesn't work because the vast majority of Starbucks customers aren't walking in with notebooks to use WiFi (whereas virtually every iPhone customer *is* using their provider's network to make phone calls; that's why it works for Apple and its mobile network partners).

Giving stuff away for free doesn't work for everyone. And for a business that has to employ who-knows-how-many engineers and service agents to maintain a network like this, they need a way to make money but still attract customers. Being a T-Mobile Hotspot customer for about 4 years now, I think AT&T's plan is the perfect compromise between giving a reasonable amount of time away for free, and charging a very fair price to those who need more. Remember, before AT&T, T-Mobile was charging $30/month *with a contract,* $40 if you go month-to-month, or $20/month only for Starbucks employees or T-Mobile customers.

This is a much better deal all around for everyone.

Chartier,

Kudos on a _long_ reply. Have that in pocket?

I never mentioned SBUX (as wifi provider).

I also didn't suggest that ATT should offer UNLIMITED free wifi. Just a streamlined approach to offering access.

I'm not one to hold my opinions on a rail. You make some great points.

@ Chartier,

Nice reply. While I'm sure most people won't find ways around it I wonder how easy it will be to continue with more than 2 hours. I figure the network will keep track of you MAC address, which is a software version of BIA (burn in address). Since you can alter your MAC address this shouldn't be tough to do, hell a simple GUI app that generates a new one on the fly could even be written with ease.

AT&T (or T-Mobile) make their money because for every 2 hour free WiFI user they have another user who pays for DSL and is using his access (thus, the money is pulled from that account), or the EDGE PC card user using WiFi instead (and they make their money from his account). It's all about balancing - the 2 hours free wifi is an incentive, not a money-maker. Shifting income from profitable areas cover the cost.

"I'm totally confused by this. Is the 2 hours of wi-fi service really free? Must you be an AT&T customer/subscriber?"

Any customer walking in with a WiFi-enabled device can get two hours of service each day for free. If you're an AT&T DSL/broadband customer, you get unlimited access to Starbucks hotspots for free.

"How is this a viable approach for AT&T? It might make sense for Starbucks to subsidize this to bring customers into their stores, but without that, why would AT&T pay for it?"

Giving two hours away for free is like a car dealership letting you test drive its cars. It's a sample of the real product to entice you to actually buy. There are lots of people who would actually pay for the full account if the price was right. T-Mobile hotspots, before this AT&T switchover, were charging unreasonable prices for the service, and I expect $20/month for non-AT&T broadband customers to be much more appealing to a wider audience.

As a writer who works out of the home, I find it incredibly valuable to be able to head to a neighborhood Starbucks to work for the morning or afternoon and get out of the house. I've been splitting a T-Mobile hotspot account with a friend for a few years now because it was useful to both of us, and sharing it made it economically feasible. Plus, since a real networking company was running the hotspot, it has much better performance and reliability than the crappy little router indie coffee shops squeeze atop their shelves between the syrup and the dusty employee manual.

"Giving two hours away for free is like a car dealership letting you test drive its cars. It's a sample of the real product to entice you to actually buy."

Now I see where you're coming from. That, frankly, is an inapt analogy, one that applies to a vast _minority_ of SBUX customers.

If you don't agree, I ask you this: what percentage of SBUX customers stay in-store for more than the 5-to-15 minutes it takes to get their cup in hand?

My guess, as I've never seen a formal estimate (and I look for this stuff, because I own SBUX shares), is something in the range of 15-25%. The rest take their coffee and roll.

Therefore, I'm assuming that ATT is more interested in gaining customers in _general terms_ (read ATT Wireless, broadband, etc, across the board) than they are holding out hope that they'll get SBUX customers to sign up for their pay-for WiFi services.

Peace

It takes an act of GOD to get an AT&T pole jockey to come out and realign the cell towers antenna's in some states. In Smalbany NY goto the corporate store and bitch and something is done with in 2 weeks only because there pole jockeys are on the second floor. In areas all around where I live there are GREAT and NOT SO GREAT reception. Remember that GSM is not the same as CDMA technology.
I'd go to the local corporate store ask for a manager and explain the problem, document everything call customer care and have them document and make notes and at the end you should have enough ammunition to ask to get out of your contract early with out there stupid ETF fee's and sell the iPhone on eBay or Craigslist or keep it.

AT&T has said that they'll be transitioning over those accounts through all this, so you shouldn't have to worry about a thing. I logged into a Starbucks hotspot yesterday and I think I saw links from the landing page to more information about the switchover and what happens to accounts like yours.