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AT&T - Starbucks’ WiFi Deal Usurps T-Mobile and Expands the AT&T WiFi Footprint Nationally| Feb 12, 2008 | Wireless Services - U.S.
| Competitive Intelligence Report Current Perspective: Positive Event SummaryOn February 11th AT&T Inc.and Starbucks announced plans to deliver AT&T Wi-FiSM service at more than 7,000 company-operated Starbucks locations across the United States. Starbucks and AT&T will offer a mix of free and paid Wi-Fi offerings at Starbucks stores to meet the needs of both frequent and occasional Starbucks Wi-Fi customers. Analytical Summary• Current Perspective: Positive on the AT&T-Starbucks relationship, because it furthers the carrier’s momentum in data services and adds incremental value to its already announced offer of free unlimited access to the AT&T WiFi network for its wireline broadband users. Usurping T-Mobile’s exclusivity at the Starbucks locations opens up revenue up-sell opportunities relating to WiFi usage. Yet work is required to continue to bring benefit to both business and consumer high-value wireless subscribers who operate WiFi-enabled devices (read iPhone) either via an add-on approach or bundled as part of a data plan. • Vendor Importance: Very high to AT&T, because its WiFi network now has a broader national appeal. With a bulk of its coverage still restricted to the legacy SBC and BellSouth footprints, the addition of more than 7,000 Starbucks hotspots increases that national footprint by 70%. In addition WiFi usage not only generates revenue in itself but may stimulate data usage for AT&T across the board. • Market Impact: Moderate on the wireless services segment, because the T-Mobile Hotspot data card and @Home services are preserved through an agreement between AT&T and T-Mobile. This potentially furthers T-Mobile’s move to bring forth landline substitution through Hotspot @Home. CDMA rivals should be less threatened as they are aggressively pushing 3G, with the message that data users already have high-speed access independent of a defined hotspot. Recommended Competitor Actions• Verizon Wireless should dismiss the hype of WiFi and tout that one doesn’t need to find a hotspot for data connectivity if AT&T’s data network were fully and robustly 3G. They should point out that this deal reaffirms the value of mobile data – when you want it where you want it. • Aside from ensuring Xohm’s rollout and success, Sprint should consider leveraging its own WiFi network to its consumers if it needs to. This WiFi capability provided through partners has always been marketed towards the business segment without any focus towards consumers. • Alltel should tout its own WiFi add-on service, but should consider lowering the price to be more competitive. Alltel’s pricing was always higher than that of T-Mobile’s Hotspot service and in contrast to AT&T’s new pricing, the value gap is apparent. • Although Verizon cannot compete directly against AT&T on the wireline side as it has not invested in WiFi, it is missing this slam dunk WiFi value proposition against cable that AT&T now enjoys. Having something similar such as an unlimited mobile broadband plan would enhance the sales of wireline broadband (DSL or FiOS). It also speaks to further linking the wireline and wireless business units through product. Recommended End User / Customer Actions• End-users who use the pay as you go option to access Starbucks WiFi will see an improved price point. T-Mobile’s Hotspot access charged $6 for 60 minutes whereas under the new AT&T-based approach, customers would only have to pay $3.99 for a two-hour session. Best of all, if customers are frequent Starbucks buyers/card holders, WiFi is free for two hours daily. CLIENTS ONLY Current PerspectiveCompetitive Positives and ConcernsRecommended Vendor Actions| Client access - Wireless Research Portal | More information |
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