T-Mobile sues Starbucks over Wi-Fi

By , IDG News Service |  Mobile & Wireless

T-Mobile is suing Starbucks for marketing a new Wi-Fi service with AT&T,
charging the coffee giant with breach of contract.

T-Mobile claims that Starbucks agreed not to advertise Wi-Fi services from
AT&T in its stores in any given market until the entire market had switched
its stores from T-Mobile to AT&T. T-Mobile had an exclusive deal to provide
Wi-Fi in Starbucks stores, dating back to 2002, but earlier this year Starbucks
signed a deal with AT&T to take over the Wi-Fi service in the coffee shops.

However, Starbucks and AT&T have begun marketing a new Wi-Fi service in
all Starbucks stores, even though so far stores in only two markets, Bakersfield,
California, and San Antonio, Texas, have fully switched to AT&T, the lawsuit
alleges.

On June 3, when Starbucks launched the promotion that offered two hours of
free Wi-Fi access from AT&T in its stores to users of a new affinity card,
so many people tried to sign up that they overwhelmed Starbucks' Web site, the
coffee company said.

As part of a transition agreement, T-Mobile and AT&T also agreed to provide
Wi-Fi services to each others' existing customers in coffee shops, without charging
each other for the access, the lawsuit says. But Starbucks started advertising
the new Wi-Fi service through AT&T on a nationwide basis, and since T-Mobile
still operates the bulk of the coffee shops, T-Mobile is currently offering
access to users of the new promotion without compensation, it said. "Since
T-Mobile provides the resources and equipment to support Wi-Fi services in non-transitioned
stores, it is T-Mobile alone that is bearing the cost and burden associated
with this 'free' Wi-Fi offer," it said in the filing.

T-Mobile is claiming loss of revenue and reputation due to the new promotion,
and is looking for damages and for Starbucks to comply with its agreements with
T-Mobile.

Neither Starbucks nor AT&T addressed questions about the allegations in
the suit, but they both issued similar statements. "Our goal is to ensure
Wi-Fi access at all Starbucks locations," Starbucks said. AT&T added
that its goal was to ensure Starbucks Wi-Fi access for its qualified high-speed
Internet customers, as well as Starbucks Loyalty Card customers. Both said they
have taken steps to ensure that the access will continue.

The lawsuit was filed in the Supreme Court of the State of New York.

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