By Eric Griffith

February 28, 2003

UPDATED: T-Mobile’s wireless networks in Starbucks Coffee shops and airport clubs will be cheaper after this weekend as the company cuts prices.

T-Mobile Hotspot, the service provided in airport clubs and Starbucks Coffee Company shops just got cheaper.

Pricing changes reported earlier by CNET were not accurate. According to T-Mobile spokesperson Kim Thompson, by Monday, March 3, new pricing should be in place at the 2200 Starbucks shops and other locations with Wi-Fi service.

The pricing plan changes include moving the Unlimited National plan from $49.99 per month to $29.99 per month. In addition, T-Mobile is doing away with caps on data transfer (previously 500MB) so it is fully “unlimited” — but to get the $29.99 price, users must sign up for a one year subscription.

The company has scrapped the Unlimited Local plans which used to cost $29.99 to use just hotspots in their local area.

Those still looking for a month-to-month plan with no commitment can pay $39.99 per month.

The previously mentioned “$6 per day” plan was also in error: the change here is for the metered Pay-as-you-go plan to move from $2.99 for 15 minutes with $.25 per minute after to $.10 per minute (with a one hour minimum). Thompson says this is more in line with how users work with the service, thus dropping price from $14.24per hour to $6 per hour to start. “Whenever you reduce pricing, you expand the scope of people who can engage the service,” says Frank Ramirez, Director of Business Products at T-Mobile. “But what’s driving our thinking is feedback from customers on the complexity of the pricing. We have a promise to our customers to deliver value.”

T-Mobile has been offering the service at Starbucks since August of 2002 and currently has hotspots available in company-owned Starbucks locations across 23 states as well as Washington, DC. It’s the largest rollout of Wi-Fi hotspots by a single company so far. The company also has hotspots in several major airport lounges, and has announced services will eventually be available in the cafes of Borders Books and Music stores. There should be 400 of them by the end of the year.

In the original story regarding the price drop, Starbucks New Ventures Director Lovina McMurchy is quoted as saying that even the busiest Starbucks shops get about 20 Wi-Fi devices on the network per day. While T-Mobile doesn’t release cost information for providing the hotspot, the revenue generated from so few customers is probably not enough to cover costs of a high speed line — the T-Mobile Hotspots are served by costly T1 lines — and the revenue sharing between T-Mobile, Starbucks, and HP, which provides some software for the services.

When asked about the future of integration of T-Mobile’s mobile voice and Wi-Fi data users, Ramirez says, “We’re still early in the game but the future for T-Mobile is all about integrating the Wi-Fi service with company’s existing voice and 2.5G GPRS services to offer a complete service package to consumers.”

T-Mobile was the first mobile phone carrier in the United States to get into the Wi-Fi hotspot business. AT&T; Wireless has since followed, and services are expected from others soon.