T-Mobile sues Starbucks over alleged secret AT&T Wi-Fi deal

Posted by Humphrey Cheung

New York (NY) – T-Mobile is suing Starbucks over a new Wi-Fi plan that allows AT&T customers to allegedly piggyback onto T-Mobile’s bandwidth.  In the lawsuit filed at the New York Supreme Court, T-Mobile alleges that the plan will cause loss of revenue and that it has exclusive rights to “sell, market and promote” Wi-Fi access in almost all of Starbuck’s areas.  T-Mobile also says that it would unjustly bear all the financial costs of supporting AT&T users.

After wading through the 14 page legal document, which you can read here, we think T-Mobile may have a good case on their hands.  Back in 2002, Starbucks and T-Mobile agreed to offer paid wireless at almost all Starbucks markets.  Customers purchased the access through T-Mobile and could sign up for a yearly commitment for $30/month or a day pass for several dollars.  Speeds were actually fairly decent (I’ve been a user for three years) as a T1 landline was connected to the stores.

Earlier this year, Starbucks announced that AT&T would be the new wireless provider and that all locations would transition to the new company by January 4th 2009.  According to the T-Mobile lawsuit documents, all three companies agreed that during the transition existing customers of one network would be able to use the other network for free.  Basically, a store that already switched to AT&T would have to let T-Mobile customers freely log in and vice-versa.

Seems simple enough, but here’s the rub.  Recently Starbucks began selling a Rewards card that lets buyers log into an AT&T page.  From this page, they can access Wi-Fi at ANY Starbucks location for free.  T-Mobile claims this card was launched without consultation with T-Mobile.  From T-Mobile’s viewpoint, it is forced to support these new customers even though it “agreed to provide access only to AT&T’s existing subscribers”.

Of course like many other lawsuits, this one is basically about money and T-Mobile is demanding an injunction along with compensatory damages and legal fees.