A Sour Latte; T-Mobile Sues Starbucks Over AT&T Deal

AT&T and Starbucks are very close these days.  Starbucks buys WiFi internet from AT&T for its cafes and offers users of Apple’s iPhone special offers like in-store downloads and free WiFi as well.  T-Mobile isn’t so happy with these arrangements and claims that it had an exclusive arrangement with Starbucks, which the company violated through secret collusion with rival AT&T.

T-Mobile filed the suit last Thursday in New York State Court.  The suit references an agreement that had been reached between AT&T, T-Mobile, and Starbucks of how to handle the transition of some stores from the old T-Mobile contract to the new AT&T contract.  The agreement, reached in February, promised that T-Mobile would stay in operation in the stores and have the exclusive rights to “sell, market and promote its services” until AT&T had fully set up its systems at the store.

The new suit alleges that Starbucks and AT&T conspired to sneak out of this agreement.  It seeks unspecified damages against the coffeehouse giant for breach of its contract and unfair competition.

According to the agreement, the stores would be converted on a “on a market-to-market basis”, likely by region.  Until the conversion of a market, T-Mobile states, it would have exclusive sales rights.  T-Mobile’s lawyers write, “T-Mobile had made a very significant investment in the technology and equipment necessary to provide Wi-Fi service in the many thousands of Starbucks stores in the United States.”

According to the law team, “Starbucks and AT&T … secretly developed a promotional plan under which they would offer ‘free’ AT&T/Starbucks Wi-Fi even in stores” which were supposed to still be T-Mobile supported.  The suit details, “To date, only two markets — the San Antonio, Texas, and Bakersfield, California, markets — have been transitioned from T-Mobile to AT&T.”

Starbucks spokeswoman Stacey Krum issued a statement taking issue to T-Mobile’s claims.  She says, “Our goal is to ensure Wi-Fi access at all Starbucks locations. This is a benefit offered to our Starbucks Card Rewards members as well as AT&T subscribers and steps are being taken to ensure that this access continues.”

The competition between AT&T and German-owned T-Mobile is typically fierce.  T-Mobile is the fourth largest mobile phone company in the United States, while AT&T is currently the largest (though it will likely be passed by Verizon once the sale of Alltel Wireless is complete). 

The pair clash frequently in the WiFi market.  In recent years coffeehouse WiFi has become an increasingly promising customer draw and source of income.