Starbucks, DT launch Wi-Fi coffeehouse network

Coffee monolith Starbucks Coffee Co. has launched a wireless LAN (WLAN) service in its coffeehouses throughout the U.S. in conjunction with the wireless subsidiaries of Deutsche Telekom AG (DT), T-Mobile International AG and VoiceStream Wireless Corp., the companies announced Wednesday.

Starbucks customers in approximately 1,200 of its U.S. stores will be able to check e-mail, use the Internet, watch streaming video or download multimedia presentations for a fee over the WLAN service, which uses the Wi-Fi or IEEE 802.11b protocol, the companies, during a press conference held at a San Francisco Starbucks coffee shop. The Wi-Fi network will be backed by T-1 connections over T-Mobile's backbone in some of the more popular venues in the U.S.

The company plans to add the service, called T-Mobile HotSpot service, to an additional 800 locations in the U.S. by the end of the year and is also running a pilot program in select coffeehouses in London and Berlin, the companies said. Additional European cities will be added to the program over "the coming months," the companies said.

To connect to the service, customers need a T-Mobile HotSpot account and Wi-Fi capability for their notebook computer or Pocket PC.

As part of the service, Hewlett-Packard Co. is also offering free, downloadable software, Wireless Connection Manager, that enables users to configure their notebooks and Pocket PCs to automatically sense and connect to available wireless networks, the companies said.

"One of the things we found was that if you weren't running (Windows) XP, it took 14 steps to set up the devices, and we said 'that's not good,'" said Michael Capellas, HP's president, during the press conference. "We challenged our team to solve this problem."

HP provided some technology consulting for setting up the networks and is hoping the deal will spark sales of its wireless-ready PCs and handheld devices. HP also announced Wednesday that it has joined the Open Mobile Alliance (OMA) -- a group of some 200 companies working to set standards for wireless communications.

The T-Mobile HotSpot service marks Starbucks second attempt to offer wireless high-speed Internet connections to its coffee-drinking customers. Last year, Starbucks and MobileStar Network Corp. announced plans to hook up each Starbucks store to MobileStar's Wi-Fi network, until MobileStar pulled the plug on its high-speed wireless network last October. The service would have cost users US$0.20 per minute or $15.95 per month, while using software and services from Microsoft Corp. About 350 Starbucks shops had been tied into the MobileStar backbone about four months before the partnership was ended.

The fee for using the T-Mobile HotSpot service varies between different plans: from $2.55 for a pay-as-you-go service to $29.99 per month for unlimited local use and $49.99 per month for unlimited national use in the U.S., the companies said. Starbucks, T-Mobile and HP are also offering users a free one-time 24-hour trial of the wireless broadband service.

One analyst at the event wondered whether enough subscribers will sign up to make the deal worthwhile for the parties involved, but said teaming with Starbucks could help T-Mobile boost its name recognition.

"It's somewhat of a brand-building exercise for T-Mobile," said Seamus McAteer, principal analyst at Zelos Group LLC. in San Francisco. "All of a sudden, T-Mobile is in every Starbucks."

McAteer expects close to 50,000 subscribers to sign up over the next two years. This number, however, probably would not cover the cost of setting up and maintaining the wireless network, he said.

The network is password protected, so it will remain off-limits to non-subscribers, even if their devices detect the network, a T-Mobile representative said. The network can also prevent a user from logging on using the password of another user who is already on the network, he said. In fact, if the system detects more than one person trying to use the same password simultaneously, that account would be closed, he said. In addition, the network software will detect strange log-in patterns, such as someone signing on in San Francisco and then in Denver a few minutes later.

The Wi-Fi service is now available at Starbucks stores in Atlanta, Boston, Connecticut, Denver, Dallas-Ft-Worth, Houston, New York, Philadelphia, Portland, Oregon and Austin, Texas. The service can also be used in the San Francisco Bay Area and the Seattle-Puget Sound region, the companies said.

Along with extending the service throughout the U.S. and Europe, Starbucks, of Seattle, T-Mobile, of Bonn, Germany, and HP, of Palo Alto, California, plan to collaborate on offering new wireless products in the future, the companies said.

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