The Wall Street Journal-20080212-Starbucks- AT-T Pact Means Free Internet Access for Some

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Starbucks, AT&T Pact Means Free Internet Access for Some

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Starbucks Corp. has struck a deal with AT&T Inc. to offer free wireless Internet access to some customers at the majority of its U.S. coffee shops.

The move comes as the Seattle chain is trying to improve the experience customers have inside its stores and as competing restaurants and cafes increasingly are offering wireless Internet access for little or no cost.

The deal will give AT&T's roughly 12 million broadband customers unlimited free access to wireless Internet service at more than 7,000 Starbucks cafes in the U.S. People who have a Starbucks card, a loyalty card that customers load with money to pay for purchases, will get two hours of free wireless Internet service a day starting this spring. Otherwise customers will pay $3.99 for a two-hour session, or they can buy a monthly membership for $19.99 that will include access to any of AT&T's other hot spots world-wide.

The deal bolsters AT&T's effort to shift toward Internet-based services rather than traditional landline phone service, which is a shrinking business. The company wants to make high-speed Internet service as widespread as possible so it can sell more devices and services that benefit from broadband access.

Starbucks Chairman and CEO Howard Schultz wants to make better use of the Starbucks card as he attempts to turn around the struggling coffee giant. Starbucks customers have long complained about having to pay for wireless Internet access. McDonald's Corp., which offers wireless Internet access at 9,500 U.S. restaurants, gives free access to some AT&T customers and otherwise charges $2.95 for two hours of access.

"People want to be mobile and have access wherever they are," said Chris Bruzzo, chief technology officer for Starbucks. The new pact between the two companies will "provide a really high-quality experience for the broadest number of people for our stores," he said.

Starbucks previously had offered wireless Internet access inside its cafes through a partnership with Deutsche Telekom AG's T-Mobile, charging customers $6 for the first hour, then 10 cents per minute. Mr. Bruzzo said the new pact with AT&T came as Starbucks was "reaching the end of an agreement with T-Mobile." Starbucks has been a customer of AT&T's enterprise services for about 10 years. Starbucks said T- Mobile HotSpot customers will be able to continue to gain access to wireless Internet services at no additional cost.

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Mike Esterl contributed to this article.