Market Overview

Why Is Google Giving Starbucks Customers Free Wi-Fi?

Up until now, AT&T (NYSE: T) provided free Wi-Fi to Starbucks (NASDAQ: SBUX) customers in America.

Going forward, Google (NASDAQ: GOOG) and Level 3 Communications (NYSE: LVLT) will replace AT&T as the providers of free Internet access.

On its official blog, Google promised to deliver Web surfing speeds up to 10 times faster than before. The download speed could be 100 times faster for those who visit a Starbucks coffee shop in a Google Fiber city.

Related: Google Pays $1 For a $39 Million Fiber-Optic System

By signing with Starbucks, Google can test new markets and provide Internet to millions of customers every single year. The company will bring its free Wi-Fi services to all 7,000 company-operated Starbucks locations in the United States.

If each Starbucks location had only one Wi-Fi customer per day, the company would still serve free Internet to 2,555,000 million people very year (one person at each of the 7,000 U.S. locations x 365 days = 2,555,000).

This investment is likely to cost Google or Starbucks a lot of money up front (depending on who's actually paying for the service). However, the long-term benefits are enormous.

In addition to reaching new markets, Google will be able to place its own brand of services (discreetly or otherwise) all over Starbucks Internet.

The company could also use its powerful data collection tools to get a sense of the websites that Starbucks customers prefer to visit. That information could be invaluable to Google.

This is one of the caveats of free Internet. Consumers are often warned that others can view what they see while connected to the network. Google could easily add a disclaimer about how it may also collect personally identifiable information and/or non-identifiable information in order to better serve Starbucks customers.

The firm's Code of Conduct might require (or at least inspire) Google to be completely forthcoming about this data collection, and offer an opt-out feature for those who don't want to share any information.

Data is one of the more important resources in Google's arsenal, but this deal should be beneficial regardless. At the very least, Google could use its Starbuck success stories (which are likely to follow in the months to come) to promote Google Fiber as it arrives in new cities. If consumers grow to love and trust free Google Wi-Fi, why wouldn't they be excited to bring home a faster version of that service?

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ

Posted-In: AT&T Google Google Fiber Level 3 Communications StarbucksNews Tech Best of Benzinga

 

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