Caffeinated, But Unwired

My name is Jason, and I have a drinking problem. I'm hopelessly addicted to Starbucks toffee nut lattes. There's a Starbucks about a block from my apartment, and rarely does a day go by when I don't stop in to nourish the monkey on my back. Never once during my many Starbucks excursions have I seen any of my fellow customers using the coffeehouse's T-Mobile-sponsored Wi-Fi services, however--short of the instructional brochures positioned near the cash register and a small advertisement affixed to the window near the front door, there's no obvious hint that the place doubles as a wireless hot spot.

This morning, I stopped in as usual, but this time I picked up one of the T-Mobile brochures to browse while waiting for my order. Inside, in addition to an introduction to the wireless Internet and connectivity instructions, was a coupon for a free day access pass. "Has anyone ever come in here and used this Wi-Fi service?" I asked the Starbucks barista preparing my drink. He shook his head. "I've never seen anyone use it," he said, but added helpfully, "I know the equipment is installed."

Last week, T-Mobile announced it was slashing prices on its Starbucks Wi-Fi services. Unlimited monthly access is now $30 a month, $10 cheaper than before. The price cut isn't the first sign the commercial hot spot model may be in trouble--in February, hot spot service provider Joltage Networks announced it was shutting its doors. Wi-Fi itself isn't going away anytime soon, but its evolution--at least as revenue-generating technology--seems to be at an impasse right now. If my local Starbucks is any indication, T-Mobile's vision for hot spot dominance is desperately flawed. But rather than writing the experiment off as a loss, it seems far more productive to consider what's gone wrong and how it might be fixed.

First, there's no marketing. Brochures and stickers in windows do not a marketing campaign make. Wi-Fi is still a new and foreign concept to many, so why doesn't each Starbucks set up a laptop or Pocket PC to allow customers to investigate and sample the service? Second, there seems a huge disconnect between T-Mobile and Starbucks--unlike independent Internet cafés that have integrated the wireless Web into the fabric of their beings, Starbucks barely acknowledges that Wi-Fi services exist within its walls. The baristas seem ill informed about the service and do nothing to promote it. For this to work, T-Mobile and Starbucks need to work together to foster the idea that Wi-Fi is as much a part of the coffeehouse experience as scones and morning newspapers.

But ultimately, it's the price point that's the real issue. In announcing the new price cut, T-Mobile Director of Business Products Frank Ramirez said, "We want to continue to be the most affordable service out there." There's only one problem with that logic: There already are more affordable services--specifically, the hundreds if not thousands of free community Wi-Fi hot spots that have sprouted like weeds across the country. Let's say for the sake of argument that at $30 a month, T-Mobile/Starbucks Wi-Fi service is a good deal. (It's not, but that's neither here nor there.) It's still $30 more expensive than a wireless freenet that offers the same services. And that's the problem with all current commercial hot spot models--why pay for something that's readily available for free, especially in the urban areas where most Starbucks franchises are located?

I'm not ever going to pay $30 a month for Wi-Fi. And as a loyal Starbucks customer, why should I? Where are the incentives? Why don't I get a free 24-hour access pass for each latte I buy? That's the way to get customers hooked on the service--and believe me, Starbucks could teach Pablo Escobar a thing or two about getting folks addicted to their product. And it's the kind of corporate synergy T-Mobile and Starbucks are sadly lacking.

Just because current commercial Wi-Fi models aren't working doesn't mean the basic concept is inherently flawed, mind you--nor does it mean commercial hot spots should concede defeat to their free counterparts. As an idealist, I find the growth of grassroots freenets terribly exciting--power to the people, right on! But as a pragmatist, I also recognize that for Wi-Fi to continue to evolve and grow and become the agent of far-reaching social change I truly believe it can be, then it must take off as a commercial technology. Only when Wi-Fi begins making money will the wireless industry spend the money necessary to push the technology further ahead. Otherwise, the Wi-Fi revolution ultimately won't amount to much more than a hill of beans.

Contact me at jankeny@primediabusiness.com.