Winners and Losers in the Starbucks-Google Wi-Fi Upgrade

By

If alarm bells aren't going off in AT&T and Verizon over Google's deal with Starbucks to upgrade Wi-Fi speeds, a lot of people need to start looking for jobs. It isn't a namby-pamby couple-of-cities fiber deal; we're talking national footprint. 

Currently, Starbucks stores get Wi-Fi speeds at an average of 1.5 Mbps, according to press reports. Beginning today, new U.S. company-operated Starbucks stores will get "up to" 10 times faster network and Wi-Fi speeds. Over the next 18 months, Starbucks will convert more than 7,000 U.S. stores to the upgraded network and Wi-Fi. 

AT&T has lost in at least four ways, by my count. First, it lost a large Fortune 500 customer to Google and Level 3. That is going to sting on someone's bottom line.   Second, the loss suggests AT&T couldn't be innovative enough in structuring a competitive deal to keep the business. 


Image via Shutterstock

Third, Google and Level 3 are now building a national Wi-Fi network. One might argue that this is a good thing, because data traffic will be off-loaded from AT&T's 3G/4G cellular networks. I'm not so sure, because all that traffic gives Level 3 a stronger position at the table when it comes to negotiating peering and settlement agreements with other carriers. Typically, he who has the most bits wins.  (Interesting footnote: On July 16, Level 3 and Comcast announced they “have resolved their prior interconnect dispute on mutually satisfactory terms. Details will not be released." Hmm.)

Speaking of cellular networks, let's talk LTE small cells – the technology AT&T loves to gush about. AT&T had a unique opportunity to leverage Starbucks' 7,000 U.S. store footprint to deploy small cells in a co-location arrangement. It's gone, so that's about 7,000 pieces of real estate that AT&T now has to find anew for small cell deployment. (Yes, I know, it's some number smaller than 7,000 cells due to overlap, cellular coverage and other factors. Regardless, it's a lost asset that AT&T will have to make up out of its own pocket in another fashion.)

Similarly, Verizon can't be happy about this deal if it is thinking small cells + Fortune 500 customer = goodness. It will likely pick up some last mile business in the short term from the deal, but the long-term picture might not be as good.

Longer-term, Google is well capitalized and has put gigabit fiber into Kansas City. It is doing builds in Austin, Texas, and Provo, Utah. Put the pieces of Wi-Fi, a Level 3-backed national network, and local fiber together and you get a nascent carrier that likely has a few more disruptive cards in its deck to play in the months and years to come.

Another big winner here is Level 3, a company that seems to have mastered the skill of the big integration deal to the chagrin of AT&T and Verizon.   Level 3 has traditionally been strong in the video/digital media field, but it has added cloud voice capabilities, making inroads into the online gaming space, and leveraged its relationship with the Internet 2 consortium to offer turnkey phone services for educational institutions. At this rate, Level 3 will be giving a keynote speech at the next GENBAND user event blowout.

Hopefully, Starbucks' move to upgrade bandwidth will serve as a wake-up call to the hospitality industry to do the same on its properties. Broadband connectivity is woefully inadequate and unreliable in most hotels. Hmm, let's see, Google building out broadband Wi-Fi nationwide, hospitality chains in need of an upgrade at a favorable group rate, is anyone at Google thinking what I'm thinking?




Edited by Alisen Downey

Contributing Editor

SHARE THIS ARTICLE
Related Articles

Coding and Invention Made Fun

By: Special Guest    10/12/2018

SAM is a series of kits that integrates hardware and software with the Internet. Combining wireless building blocks composed of sensors and actors con…

Read More

Facebook Marketplace Now Leverages AI

By: Paula Bernier    10/3/2018

Artificial intelligence is changing the way businesses interact with customers. Facebook's announcement this week is just another example of how this …

Read More

Oct. 17 Webinar to Address Apache Spark Benefits, Tools

By: Paula Bernier    10/2/2018

In the upcoming webinar "Apache Spark: The New Enterprise Backbone for ETL, Batch and Real-time Streaming," industry experts will offer details on clo…

Read More

It's Black and White: Cybercriminals Are Spending 10x More Than Enterprises to Control, Disrupt and Steal

By: Cynthia S. Artin    9/26/2018

In a stunning new report by Carbon Black, "Hacking, Escalating Attacks and The Role of Threat Hunting" the company revealed that 92% of UK companies s…

Read More

6 Challenges of 5G, and the 9 Pillars of Assurance Strategy

By: Special Guest    9/17/2018

To make 5G possible, everything will change. The 5G network will involve new antennas and chipsets, new architectures, new KPIs, new vendors, cloud di…

Read More