Chicago/T-mobile: Starbucks brews up wireless link

[Kenny]

Starbucks brews up wireless link
Service targets the laptop set

By Barbara Rose
Tribune staff reporter
Published November 13, 2002

Chicago-area Starbucks customers now can log on to the Internet faster than a barista can fill a latte order.

At least, that's the promise of a long-awaited high-speed service scheduled to debut Wednesday at 137 local Starbucks stores--a joint offering with Deutsche Telecom AG's T-Mobile International and computer-maker Hewlett-Packard Co.

The rollout at 70 percent of the chain's cafes is part of a push by T-Mobile to put its HotSpot wireless Internet service where laptop-toting folks congregate--people as addicted to checking e-mail and the Web as coffee drinkers are to java.

The service relies on a popular technology called Wi-Fi--short for wireless fidelity--that uses short-range radio signals to connect wireless-ready computers to high-speed access points that, in turn, connect to T-Mobile's network.

T-Mobile, the nation's sixth-biggest wireless carrier, has taken an early lead in Wi-Fi, with about 1,700 locations in airport lounges and coffee shops. In addition to deals with American, United and Delta airlines and Starbucks, it has partnered with Borders Inc. to install 400 HotSpots in bookstores by the middle of next year.

The Starbucks rollout began in earnest in August after T-Mobile acquired bankrupt MobileStar Network Corp., which started a pilot project with Starbucks in 1999.

Chicago is one of 16 metro areas from Seattle to New York where the coffee chain has turned shops into Internet cafes, sans the hardware.

"I've been waiting for this," said David Ormesher, chief executive of CloserLook Inc. in Chicago. "I'd love to be able to drop in to Starbucks if I'm between meetings and be able to get online."

For a fee to T-Mobile, he's finally getting his wish. Pricing plans vary from $2.99 for 15 minutes of Web access to unlimited monthly surfing plans starting at $29.99.

Starbucks is looking to tap a bigger share of the nation's estimated 40 million professionals who travel frequently. As well, the chain says its surveys indicate that 54 percent of its regulars would be willing to pay for in-store wireless access.

"They're hoping it will help them get customers into the stores," said W.R. Hambrecht senior analyst Kristine Koerber. "Down the road, they're hoping it will result in some revenue sharing."

Another benefit: Starbucks plans to use the stores' high-speed lines to improve its operating performance by streamlining communications, staff scheduling, planning and training.

Heavy competition

For its part, T-Mobile, formerly VoiceStream Wireless, is looking to the appeal of brands such as Starbucks to reduce its cost of acquiring customers.

T-Mobile faces competition from the likes of Boingo Wireless, which has about 800 Wi-Fi locations around the country in airports, hotels and cafes, including Chicago-area hotels from the Loop's Hotel Allegro to several near O'Hare International Airport.

Still to come is a national Wi-Fi rollout by a consortium of leading wireless carriers. Dubbed Project Rainbow, the effort is backed by AT&T Wireless, Cingular Wireless, Verizon Wireless and IBM Corp.

"The race is on," said Atlanta-based telecom consultant Jeff Kagan. "T-Mobile has the early edge, but this is just the beginning. There'll be Wi-Fi access points in every hotel and on every street corner."

Wi-Fi's chief advantages are relative affordability and blazingly fast speeds. T-Mobile promises service 40 to 50 times faster than standard dial-up Internet access.

Worries about security

Downsides include security concerns. Signals from Wi-Fi networks sometimes radiate hundreds of feet, making the networks easy to share, for instance, among neighborly types who broadcast signals from home to home.

A team of computer security consultants cruising the Loop early this year discovered 575 separate wireless networks inside buildings that could be accessed from the street--a hackers' heaven when networks are not properly secured.

Kagan makes it a point never to shop online when using a Wi-Fi network, but he said he's addicted to T-Mobile's HotSpot service when traveling. "It's a virtual office," he said.

A word of caution: If his habits become the norm, parking could get scarce at Starbucks, but the coffee chain might not sell more latte.

A paying subscriber "can pull up to a parking lot and use the service," Kagan said. "I don't even get out of the car."

A HotSpot for wireless

Service: Wireless Internet access via T-Mobile HotSpot

Cost: Free 24-hour trial. Plans range from $2.99 for 15 minutes to unlimited monthly service starting at $29.99

Hardware: Laptop computer or hand-held PC with Wi-Fi 802.11b wireless card

Locations: See www.starbucks.com/hotspot