How AT&T spilled the Starbucks beans
Here’s one thing the folks at Apple could teach their friends at AT&T: how to parcel out the good news.
Case in point: the Starbucks-iPhone-Wi-Fi deal that’s been on and off all week and generating all the wrong kind of headlines (see for example, here).
If Steve Jobs were running AT&T, he would have kept it simple. And a surprise. The first we would have heard about it would be when he announced it, with a flourish, as a fait accompli. Starting today, free unlimited Wi-Fi for every iPhone owner at all 7,000 Starbucks coffee shops and every other AT&T Wi-Fi hotspot — 17,000 in the U.S., 70,000 around the world.
Boom.
What we got instead was the public relations equivalent of second-day coffee, starting with the press release AT&T (T) issued back in February. The 13-paragraph document talks about free Wi-Fi for “AT&T broadband, AT&T U-verseSM Internet [and] AT&T’s remote access services business customers” but never mentions Apple (AAPL) or the iPhone — two hot-button words that would have given the news some real buzz.
Instead reporters focused on the fact that Starbucks (SBUX) was pulling the plug on T-Mobile, which had been providing it with wireless service since 2001.
Then, last week, without warning, AT&T turned the service on. I spotted it on April 30 when I tried to log on to my T-Mobile account and discovered an AT&T link that wasn’t there the day before. I was already thinking about how many extra shots of espresso I could buy with the $39 a month I would save.
And I was not alone. Apple rumor sites that day were flooded with tips from both coasts alerting them that iPhone owners were getting free Wi-Fi at Starbucks by just by typing in their 10-digit AT&T phone number. AT&T had apparently launched a nationwide test without telling anyone.
Then, four days later, the service stopped, as abruptly and mysteriously as it started, setting off waves of confusion and speculation about what the company’s on-again, off-again behavior might mean. (see here)
You might think that AT&T would have learned their lesson. But no. On Thursday, the text on its website was changed to add language about the new service — “access to AT&T’s more than 17,000 Wi-Fi hotspots, including Starbucks* all for use (sic) in the U.S.” — that iPhone owners took as a signal that the game was on for good.
Then the language disappeared, along with the Wi-Fi service, triggering another round of second-guessing. (see here)
Apparently the habit of firing before aiming — not to mention clearing it with publicity — had spread from AT&T’s networking guys to its marketing staff.
Officially, both AT&T and Apple have no comment, but the folks in Cupertino are clearly miffed. They saw the Starbucks deal as big news for iPhone owners, and they had hoped to work with AT&T to package it for high-profile release, probably in a matter of weeks.
They would have done it right.
Oh please…I’d be using my iPhone, if I had one, to search Yahoo! for a decent coffee shop.
Mr. Dewitt, it would have been nice of you to source your last statement. The part about Apple being “clearly miffed” about the botched release. This was probably the most newsworthy element and you burried it.
ex ped: It’s called discretion.
You got to hand it to Steve jobs…There he is, in the public light backing his company’s product. I am not into business, but who runs AT&T, what does this person look like and why isn’t this person in the public light. Isn’t he or she proud of AT&T and the product/service they provide. This same question can also be addressed to other big business leaders as well. Stop hiding and stand behind your company. wrong or right, good or bad, there is Steve Jobs one on one with the public. Something to admire.
let me get this straight, you pay to use the wifi in a crappy corporate coffee-shop? Save some money and go to panera or a local coffee shop with free wi-fi. I for one refuse to patronize a place with a.) bad overpriced coffee and b.) outrageous prices for a service which should be free anyhow.
AT&T knows what its doing, for all you folks who crave free wi-fi at coffee shops and auto dealers etc, when AT&T comes out with the U-verse, nationally thats exactly what will happen.. Noone will be harping on them…. then! geeeeeeesh *keep yer knickers in your socks
Megan should be an actress. She’s accented drama in such a way as to grip the hearts of millions.
True to form….the at&t right hand does not know what the at&t left hand is doing. How sad, the internal power struggles, arrogance, & ineptitude continue to rear their ugly heads.
Now we have an acute example of why Jobs wants iPhone product to remain pure and not corrupted by bad software and in this case, not corrupted by those who have never studied Apple Marketing Strategy 101
Why anyone would want to restrict themselves to a WiFi “hotspot” is beyond me. While T-mobile charges $39 a month for WiFi access, for another $20 a month Verizon Wireless offers nationwide Broadband coverage.
Business customers are rapidly becoming the larger wireless internet customers and for a business person on the go WiFi is too limiting and restrictive.
I would much prefer to be able to pick up my PDA or laptop, leave the coffee shop or other location and just be able to get in my car or on an airplane and go rather than have to disconnect from my WiFI hotspot and reconnect all over again at the next location.
Besides AT&T’s internet access is slow and they do not have as large a coverage area as Verizon Wireless.
I meant “why do you pay or have to pay for internet access on a coffee shop ?”
My local coffee shop has sooooo much better coffee, and free internet wireless, actually … Everwhere is free internet access even in some parks here, so what is the big deal!!?
Can someone explain me ? what do you pay for internet access on a coffee shop ?
You must be an idiot if you are still paying for internet access on a coffee shop.
What a joke …
BAAAHHHHH BAAAHHHHH
First of all lets clear the facts…
SBC bought AT&T and not the other way around! SBC was changed to AT&T only by the old trade name. Who pulls the strings is SBC.
I think they are doing a great job compared to the old AT&T!
The gentleman from Bedminster’s experience at AT&T was telling: the CIO refused to use a laptop for his presentations and meetings were mandated to last 2 hours. AT&T is resistant to change and arrogant….
If the FCC had not cut off competition from smaller companies using AT&T lines, you would see competitve rates in all services and speedier rollouts. By the way, how many customers use their TV service? And how many years did T-Mobile provide WiFi service to millions of customers and small companies in Starbucks before AT&T decided that particular service would be the piece of the puzzle they need to get more wireless customers? It’s offered for free? Only if you overpay for their wireless service.
While AT&T’s technology may be new (to them), AT&T’s thinking and marketing is the old “twisted pair”. Be prepared for continued record profits, excellent lobbying efforts, and an absence of true innovation (except in marketing).
If Apple was so superior, and AT&T reputedly so bad, then why did it pick AT&T? Apple picked AT&T for you, not the other way around.
This what you get when you have the good-old-boys running the show.
For anyone confused about ATT’s behavior, all you need to do is read their filings with the Public Utility Commissions in various states.
Their official paperwork never ever mentions “customers”, only “ratepayers”.
That is because “customers” must be “serviced” while “ratepayers” need only send in a check.
If AT&T’s attitude about this is the same as I have experienced with my landline phone, they pretty much believe that “the customer is always wrong” and could care less about what we think.
I’m afraid we’re in for another period of “we’re the phone company and we’re in charge” from the new Ma Bell.
IF I could get landline service or VOIP that would support a fax machine from someone else, AT&T would be history.
This is what happens when you let lawyers manage the marketing department.
Please perform do dilegence on the media before bad mouthing anyone else.
Remember all those ads when att was broken up? ATT is just a ripoff company that nobody should support.
RE: Fitz
Power consumption. Yeah, it matters.
Why do so many people complain about all these companines? Complain about ATT, Verizon, Comcast etc. I understand they all have their issues. But if something goes right, they don’t say a word but if something goes wrong they di their best to raise hell. Like they could do better in running a company.
Yes, Divestiture was forced on them (AT&T), but they could have handled it in a much better way. They couldn’t/can’t shake the good ole’ boy mindset. And, no, the sum of the parts does NOT equal the whole.
Check for Kool Aid stains on the lips of anyone who tells you that AT&T is good or great company. This behavior is typical of the think last approach that is rife throughout the company. It is not just raising the price on broadband that gets AT&T the money to do business or increase profits, its low and stagnant salaries, cuts and increases amidst the joyous proclamations of record profits and industry numbers. It is a shame that a company so large wont institute a stock purchase program for employees but will claim that it is an employer of choice.
AT&T is a dangerously inept company, one that I cannot from a moral standpoint support.
Hah, too funny. Looks like the AT&T culture has really invaded Cingular. I worked at TCI (largest cable company at that time) when AT&T bought them and turned them into AT&T Broadband. The people of AT&T were just a bloated and idiotic company who were paranoid and very deceitful. Another example of their wastefullness was they demanded all meetings HAD to run at least two hours (first half hour for introductions) and deemed the meeting unsuccessful if they did not. Another one, the incompetent CIO they put in place would refuse to use a computer for his presentations and instead used overhead vue-graphs. Yeah, this kind of behavior of the Starbucks on again/off again wifi access doesn’t surprise me one bit.
Wi-Fi is irrelevant when you have 3G or EV-DO - I don’t see what the big deal is?
Also, I guarantee at any given time the largest percentage of phones in Starbucks are not made by Apple.
Apple sold 4 million phones in 2 quarters, while in the same period, Nokia sold over 200 million. The iPhone is such a tiny player in the cell phone market…why does every cell phone story have to revolve around the iPhone?
This is reflective of typical operating procedure in most large businesses: mediocrity rules.
AT&T is no Apple. Not by a long shot. Most companies aren’t. There are very few companies that can pull their MBA-bloated heads out of their own backsides and run their marketing using creativity, ingenuity and a little bit of chutzpa. Apple, Virgin, Burger King, Nike, adidas - these are companies people love to hear about, right? AT&T?
No, the majority of businesses are happy with safe, incremental 1% growth rather than doing it a little different, with a little splash, and possibly reinventing the landscape in the process. Mostly, it’s because their people probably aren’t rewarded for taking risks.
Really stinks too, because Starbucks needs the PR after being beaten down in the press lately.
I think I’ll wait to get excited for when Clearwire and Sprint, along with Google, Comcast, Time Warner and Bright Point, roll out Mobile WiMAX (4G) that blankets cities with high-speed wireless connectivity. It’s starting this year. Sprint already has the fastest and largest data network in the country.
To the one employee who wrote “You think this is bad try working for AT&T”. This is a company, where even in the midst of a recession, good people are running away. AT&T treats it’s employees the very worst, especially Califormia employees.
I love the verizon idiots without them life would be boring. Verizon has outdated technology, slow data, at&t edge (not 3g) actually outperforms Verizon and Sprint’s “3G” service in many areas.
Too bad at&t gets bad press for testing the old TMO crap.
As for Jobs somehow letting someone who built a company having almost no market share run things doesn’t seem to make sense. He makes products and a small group of lemmings go by anything with the fruit on it and think he walks on water. Get a clue!
“all 7,000 Starbucks coffee shops and every other AT&T Wi-Fi hotspot — 17,000 in the U.S., 70,000 around the world.”
That wasn’t the deal that was leaked, nor is it what will be offered. AT&T offers 12m of its customers (7m DSL/fiber residential, 5m remote access business) part of their domestic network, which excludes hotels and some airports. Roughly 17,000 with McDonald’s (9,500) and Starbucks (7,000) and Barnes and Noble (several hundred) being most of the footprint.
Nowhere has AT&T given anyone their premiere footprint in the US or worldwide as part of a plan.
AT&T splits its Wi-Fi plan into Basic (domestic excluding hotels, some airports), and Premier (includes Wayport roaming hotels and roaming airports, plus 53,000 other international locations). If you have 1.5 Mbps DSL or faster or any fiber plan, you get Basic. If you have slower DSL, you pay a few bucks a month for Basic. If you qualify for free Basic, you pay $10 per month for Premier. Walk-up customers can’t get Basic, and must pay $20 per month for Premier. Not simple, but that’s how it works.
ex ped: True, Glenn. That Jobs speech was purely hypothetical. The numbers were taken from AT&T’s Feb. 11 press release. (see here)
Starbucks ticker symbol is SBUX, not SBUK.
ex ped: Yikes! Fixed. Thanks.
I never really liked AT&T. I’ve always considered them the “Old Farts” of the phone industry. Caught in some time void in management styles, marketing gimmicks and technological prowess. Why Apple didn’t go with Verizon or one of the other giants…who knows.
But I do know that as “cracked” IPhones and “B”Phones (Better Phones) come out, AT&T will soon realize that their “old school” thinking is killing their profits.
But hey, I don’t mind. I owned stock in GTE and now Verizon and to be honest, I’m still very pleased with it. Thanks AT&T for helping me make money! Woot Woot!
ATT could still pull this one out of the fire, and even put a human face on their company by doing so humorously.
They could issue a press release that begins with “Doh!” Then they could explain that there was a departmental mix up regarding last minute testing of the free iPhone service.
Next, they could turn the service back on and leave it on while they work out their authentication problem. Tell the non iphone world “Enjoy the free wifi while you can and please consider purchasing wifi access at our low low prices when we get out technical problems sorted out.” In other words, give the “freeloaders” a big wink, call them naughty, then look the other way. Heck, they could even encourage it by publicizing the user agent spoofing method.
Basically, admit the goof and poke fun at themselves. Then turn the loophole into a promotion to advertise the service.
It is pretty lame that cofee shops and other places are still charging for Internet Access, it is not enough that they get your business but you still pay for accessing internet ? I don’t get it.
OH WOW WHAT A GREAT NEWS !! FREE INTERNET !!! - lame !!! …
So us other at&t wireless subscribers still have to pay regardless of how much we paid for our elaborate phones or how much we’re paying monthly to at&t? Seems I’ll be looking for another provider to my unlocked new cell phone!
I think there are several facts being left out of this story. First off, all Starbucks stores have T-Mobile Wi-Fi equipment until it can be converted over. AT&T is running tests to allow AT&T customers access via T-Mobile equipment. AT&T did not want to announce this offer until it was confident through testing that it was working properly. It was found that authentication via T-Mobile equipment was too slow and dropping users so it was pulled it. It will be re-launched once some upgrades are completed. Know your facts before you bash….
It’s too bad AT&T’s data services are so slow that the Iphone needs WiFi - where Verizon and Sprint’s EV-DO service makes the need for WiFi obsolete. I can actually use my phone as a wireless access point and provide Internet to my laptop and a few other commuters who ride the train with me.
The Iphone, although it’s a pretty piece of hardware, is wasted on AT&T’s network.
Finally you say something nice about Apple; is because you found another company to serve as not your cup of tea? So it seems; but we can let others decide.
http://www.We-Report.com
Let’s not forget that AT&T increased their monthly broadband rates in order to offer that “free” Wi-Fi service to subscribers.
If you can work out your phone billing you should have no trouble following AT&T logic or is it lack of logic!!!
I do not understand the big problem.
The approach as this generates no hostility for use in Bangladesh
and others.
The users with outdate expectation are the problem.
Wake up peoples! 2008 outside!
People should understand why these corporations are so very, very different in the way they behave. They are different because they do fundamentally different things.
Apple works to provide folks with new technology and services in the free market. They compete to provide service, materials and function to the discerning public.
AT&T, by stark contrast, generate revenue for the state by selling the people something that costs nothing (band width). The only way they can make this sort of “business” work is because the state provides a shared monopoly on the bandwidth to select corporations who then “farm” the tax revenue from people.
That is why dealing with Apple is doing business and why dealing with AT&T is like kissing Stalin’s toes to get something to eat.
Communications technology has been hijacked by the elite political class and they have feathered their families beds with the revenue from it. Given that these folks did not invent the tech, they didn’t build the infrastructure and they don’t share the profits with the public, you may understand why i state that modern communications tech law has brought back “tax farming” to our society.
Say “baa”.
Writer and opiners, next time, bring some cheese with your whine.
Note that this is a service for at&t customers; it is not apple’s.
at&t is one of America’s finest companies. My apologies to the dissatisfied employee; if you don’t like working for at&t, feel free to move on.
This is nothing different from before when we tried to work with them on game cards (pseudo-calling cards).
Big deal. Save your money, go to Panera or your local coffee shop where everyone gets free Wi-Fi and a reasonable cup of coffee. Starbucks, Apple and AT&T, a beautiful 3-way made in proprietary heaven. All three are delusional about their overrated brand and image. What a joke….
Echoing the other posters here, the company named “AT&T” is no longer the Ma Bell of old. It is now a shoddily reassembled group of disparate companies with non-integrated computer systems, run by thousands of technicians and customer reps sitting in India. I no longer consider “AT&T” to be an American company, really.
Among their other foulups recently was the SHUTDOWN OF THE CITY OF BIRMINGHAM, ALABAMA from landline service for an entire day. Can you imagine that? A phone company that shuts down a whole city due to their own technical incompetence.
AT&T is now a nightmare, as others here have noted.
You think this is bad, you should try working for AT&T
Yes, there it is. Unmistakable. On the wind, tainting the aroma of good coffee. A second hand bookstore you think, reaching for your 3G iPhone. One of those in which you step over piles of paperbacks in damp cardboard boxes stacked by the door. Or wait a minute. Heck. NO! Surely it’s not the smell of Ma Bell!
Yes YES YES YES YES !!!
Apple the best AT&T no good.
In fact Apple the best everyone else sucks, Microsoft you suck, Google you suck too, Apple just tolerates you, IBM you suck too and Cisco watch out when the MAC takes over the PC mark it will have to search for new opportunities. In fact all technology/content/media companies will be slaves to the Apple Messiah.
What do you expect from the corporate drones at AT&T? They’re too busy arse-kissing their boss-of-the-week to care about launching a service properly.
They shut it off because anyone with a safari browser could get free wifi (by switching to the mobile agent), and not just those with cingular iphone accounts
YES If At@t was more like Apple they would be a great company
But the way AT@T runs their company now is so bad it stinks
They tell you one rate and than raise the price and when you call they are plain nasty to you
If it wasn’t fot my I-Phone I would switch companys in a minute
tktk
Clear, correct, insightful, and unbiased…
Whats going on around here? 
AAPL never would have dropped the ball like this - it would have been done with a flourish as you say.
Still - when they get it working (or give it to us for real), its going to be a great deal!
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Silicon Valley veterans like to joke that Steve Jobs must be surrounded by a reality distortion field; if you get too close to him, you start to believe what he's saying. Thanks to the success of the iPod, the launch of the iPhone and the renewed interest in the Mac, Apple has made believers out of millions of customers - and made a lot of investors rich. But Philip Elmer-DeWitt believes that an ounce of skepticism never hurts when writing about the company. He should know. He's been covering Apple - and watching Steve Jobs operate - since 1982, first for Time Magazine, then for Business 2.0, and now for Fortune.
If you did read article at NYTimes.com, ATT blamed early release of free wifi to human error.
I think they recalled the offering because in less then few hours people figured out how to hack free wifi without iPhone.
You just had to change you browser agent and use iPhone number of your friend who has one.
Changing user agent is still handy to test iPhone sites
http://www.ismashphone.com/tips_and_hacks/index.html