T-Mobile says Starbucks breached Wi-Fi deal

T-Mobile is suing Starbucks for marketing a new Wi-Fi service with AT&T, charging the coffee giant with breach of contract, an IDG News report said.

The report said T-Mobile claims that Starbucks agreed not to advertise Wi-Fi services from AT&T in its stores in any given market until the entire market had switched its stores from T-Mobile to AT&T.

T-Mobile had an exclusive deal to provide Wi-Fi in Starbucks stores, dating back to 2002, but earlier this year Starbucks signed a deal with AT&T to take over the Wi-Fi service in the coffee shops, the report added.

However, Starbucks and AT&T have begun marketing a new Wi-Fi service in all Starbucks stores, even though so far stores in only two markets, Bakersfield, California, and San Antonio, Texas, have fully switched to AT&T, the lawsuit alleges.

On June 3, when Starbucks launched the promotion that offered two hours of free Wi-Fi access from AT&T in its stores to users of a new affinity card, so many people tried to sign up that they overwhelmed Starbucks' web site, the coffee company said.

As part of a transition agreement, T-Mobile and AT&T also agreed to provide Wi-Fi services to each others' existing customers in coffee shops, without charging each other for the access, the lawsuit says. But Starbucks started advertising the new Wi-Fi service through AT&T on a nationwide basis, and since T-Mobile still operates the bulk of the coffee shops, T-Mobile is currently offering access to users of the new promotion without compensation, it said.

T-Mobile is claiming loss of revenue and reputation due to the new promotion, and is looking for damages and for Starbucks to comply with its agreements with T-Mobile.

Starbucks did not answer a request for comment on the allegations.