Starbucks and Others: The Future of Public WiFi

Q1 Customer Loyalty Through WiFi

posted Oct 13, 2011, 4:22 PM by   [ updated Oct 13, 2011, 4:46 PM ]


Starbucks’ plans to offer time-limited free Wi-Fi to customers was certainly a wise move, but perhaps better defined as a “necessary” one.  As the case points out, other coffee houses, such as Seattle’s Bauhaus Books and Coffee, have “relied on free Wi-Fi to help bring in customers.”  Even McDonald’s restaurants are offering free Wi-Fi to customers. 


“Starbucks is really just evening the playing field,” says Customer Think blogger Sharon Goldman.  “They’re in a stiff coffee competition with other chains such as McDonald’s, which has been offering Starbucks-like lattes for some time and already has free Wi-Fi in its locations.”


The free Wi-Fi offer alone does not necessarily instill customer loyalty; rather it becomes a perk and adds to the business-client relationship.  It is one part of the bundled service “package.”


Most experts agree that this perk does carry some value from a business perspective.  A 2008 PCWorld article by Thomas Wailgum addresses why offering free Wi-Fi can be good for business.  The reasoning points to the fact that “the more time customers are sitting at your tables, the more money they are going to spend in your stores.”  In the article, Paula Rosenblum, managing partner with Retail Systems Research (RSR) believes that “anything that brings customers back to a store” is critical.  Although Rosenblum states her confusion as to why a fast-food purveyor such as McDonald’s would offer Wi-Fi as its goal is to have people in and out, rather than linger.


Others concur.  In his article, “The Advantages of Providing Free WiFi to Customers,” eHow contributor, Chris Joseph, states that according to, “the more time customers spend in your store, the more money they are likely to spend.”  

To say free access was a “critical factor” in developing a loyal customer base is not completely off-target.  While offering free Wi-Fi access contributes to developing and maintaining a loyal customer base, it may be more accurate to say that it may be critical to merely keeping up with the competition.

Q2: Is Starbucks Loving it?

posted Oct 13, 2011, 8:47 AM by   [ updated Oct 13, 2011, 4:41 PM ]

    The morning breakfast crowd is a wide-ranging demographic and has a variety of different wants and needs. Are consumers going towards the quick and affordable fix that is McDonald's, or are they going for the premium quality coffee and atmosphere that Starbucks provides? Are consumers basing their decision on what's for breakfast based solely on the Wi-Fi capabilities of said establishment?
    When looking at Wi-Fi capabilities inside of a restaurant there are key things to take note of. Not all Wi-Fi investments equal positive growth as this article mentions. Also, when looking at Wi-Fi capabilities, consumers prefer to have free Wi-Fi with some add-ons than  pay-as-you-go service. Taking that into account, is there a possibility that Starbucks breakfast regulars would make the switch to McDonald's if it offered free Wi-Fi?
    As Bill Tancer points out in his article "Brewing Battle: Starbucks vs McDonald's" there are myriad differences in customer segments between the two establishments. has 8.3% more female visitors and has held on to the 35-to-44 year old demographic while McDonald's website owns the 18-to-34 age demographic. Starbucks' strongest customer segment is described as, "college-educated households containing dual income couples," while McDonald's strongest customer segment is described as "lower-income households living in city neighborhoods in the south." The data shows that Starbucks and McDonald's do not seem to be directly competing for the same consumer, but in reality there are some cases where moving from Starbucks to McDonald's for Wi-Fi connectivity could make sense.
    The data above does not take into account the current recession we are in. While it is true that McDonald's and Starbucks have separate main demographics, it is hard to argue that a student or someone who is currently job hunting may base their breakfast decision solely on where they could get access to free Wi-Fi. If one was on a tight budget and did not have internet access they might readily choose McDonald's over Starbucks. McDonald's offers lower prices on food and coffee so anyone who isn't trying seeking bourgeois chic could easily make the switch to the lower cost provider.   
    Taking that into account, it is hard to see if there would be a significant portion of Starbuck's customers converting to McDonald's just for free Wi-Fi. When people go to Starbucks they expect to read a newspaper and sit on a comfy designer chair or couch. I know my dad has a strange addiction to Starbucks coffee that McDonald's coffee simply can't satisfy. Most of their customer base would be unable to trade their coffee and setting for the uncomfortable plastic stools, with kids running around, French fries in hand and ketchup on their faces screaming, "Hot wheels! Race car!".

Q4 WiFi 2020: An Inner Space Oddyssey?

posted Oct 12, 2011, 9:22 PM by   [ updated Oct 13, 2011, 10:59 PM ]

While traditional wireless technologies will likely see improvements and survive into the next decade, the world's growing population and attendant energy needs will drive the adoption of an inexpensive, universal, and above all energy-efficient wireless network paradigm. While technologies such as mobile broadband and high-speed packet access (HSPA) have been promoted within the industry by Ericsson, Nomor, and others, the next generation may be a radical departure from current network designs. Wireless Body Area Networks (WBAN) utilize low-power radio signals for transmission and compact antennas worn on the body to create connections between wearers and enable partial transmission through wearers via a "cooperative mesh network architecture."1
By using body-based receivers and transmitters as mobile, short distance human base stations in cellular networks, the entire population becomes an inegrated cooperative network. The implications for energy use, especially if proposed thermoelectric power source technologies are refined and applied, are tremendous; the vast majority of network communications could be powered by heat and kinetic energy provided by human users. The piezoelectric and thermoelectric technologies necessary to power the WBAN will likely be fully operational in less than a decade. The WBAN is not without limitations, however; certain considerations must be made for individuals or groups in transit by land, air, or sea, and therefore out of distance of the WBAN. Similarly, those residing in rural or lightly populated areas may be forced to depend upon less energy efficient static technologies. Nevertheless, 2020 may see a network enabled by microelectronic transmitters implanted in human subjects that relies almost entirely upon free, perpetually renewable energy. Or. . .
 1 -Dr. Simon Cotton, ECIT, Queen's University, Belfast, in Management Information Systems (O'Brien and Marakas, 2010, Global Edition)

Q3 No Such Thing As A Free Lunch: Privacy and Security Implications of Public WiFi

posted Oct 12, 2011, 7:38 PM by   [ updated Oct 12, 2011, 11:21 PM ]

 Conditional use of "free" public WiFi is predicated upon the assumption that users are willing to accept the intrusion of advertisements or market research for the convenience of immediate internet access. Many might be willing to pay for limited hotspot access on isolated occasions, or, in the case of frequent users, subscribe to long-term service agreements through services such as Boingo or AT&T WiFi. However, casual hotspot users are not likely to pay for a quick facebook update or casual email check; it is this larger segment of users that are targeted by conditional WiFi providers. Whether subject to obligatory advertisements, market research surveys, or more furtive (and potentially sinister) methods, such as keystroke loggers, activity-tracking cookies, and intrusive adware, users consent for convenience, often ignorant of the uses to which their data may be put (and, more importantly, by whom).
   The potential security risks are legion: whether working from a personal or corporate device, sensitive information can be unwittingly accessed or disclosed. Organizations are often targets, whether by so-called "hacktivists" or individual ne'er-do-wells with an eye toward phishing and pharming, or in some (alleged) cases, by national governments engaged in espionage. Individuals are at equal or greater risk from the above, whether due to their organizational affiliations or by pure chance; by clicking on the wrong sponsored ad while using conditional-use public WiFi, a user can be exposed to the Conficker worm, among many other types of malware, and assimilated into the botnet. The botmaster makes no exceptions for intent:

The Botnet

Whether on a personal, business, or government-issued laptop, there is a level of risk implicit in conditional-use public WiFi networks.In fact, as has been recently demonstrated by the infection of US drone aircraft with a keylogger virus, even the most technically secure network can be compromised by human use patterns: it was suggested by Noah Schachtman in an interview with Guy Raz on NPR that  the use of removable storage devices between internet-enabled computers and terminals in the closed, heavily secured US military network was responsible for the transmission of the virus to the drones. In Sum: Non-Buyer Beware.

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