Starbucks is increasingly a free wireless ISP

Brands are increasingly defined by their networks. Starbucks leads the way in becoming a retail -- and free -- wireless ISP.

Recently, while in Barcelona for Microsoft Convergence, I found myself grumbling at the AT&T Passport app; $120 of roaming doesn't go far without supplemental Wi-Fi. Fortunately, in Barcelona, like everywhere else, Starbucks provides a reliable Internet fix for network admins and civilians alike. So much so that increasingly visitors are not thinking "coffee" when they Google-map Starbucks, they're thinking "network."  Indeed, Starbucks' identity as a brand is tied as much to the Internet as it is to coffee, and as it transforms into an unwitting Internet service provider, delivering a sub-par online experience could hurt the bottom line. Starbucks' growth as a free wireless ISP is an example for other branch-based businesses.

23,000 remote offices

For admins at a typical national retailer, ensuring point-of-sale services, order management and accounting systems at a hundred locations can be difficult, especially achieving 100% aggregate uptime. Even for a metropolitan real-estate company with 10 branches, definitively monitoring and managing the branch office local Internet connections, composite software as a service (SaaS) app access and VoIP services can be a pain.  

It's the burden of any inside-out IT organization where instead of one factory with lots of sales offices, you have a small central office with dozens or hundreds of factories. Starbucks has, in fact, more than 23,000 "factories" under the green Siren, with most providing free Internet. And tellingly, this emerging wireless ISP just partnered last year with Google/Level 3 Communications to provide connectivity across its 7,000 U.S. locations.

Starbucks recognizes that connectivity has become an entitlement, and brands providing great Internet experiences under their logos create warm fuzzies that translate into return business

Keeping those stores connected and acting as a free wireless ISP costs Starbucks tens of millions of dollars in the U.S. alone, and other than the Capex-able barista, networking gear must rank near the top of the list of pricey assets. So, why would Starbucks invest so much in distributed IT if its business is allegedly selling coffee?

Monetizing connectivity entitlement

The answer for Starbucks, and increasingly many other businesses struggling to provide customer Internet access outside their core expertise, is that Starbucks is not just selling coffee. It, like most successful brands, is selling an experience. The chain launched Starbucks Evenings with craft beer, wine and creamy truffle mac and cheese because it doesn't want customers to simply execute transactions -- it wants people to dwell.

To that end, Starbucks recognizes that connectivity has become an entitlement, and brands providing great Internet experiences under their logos create warm fuzzies that translate into return business. In becoming a free wireless ISP, Starbucks is building social centers for a generation that never had a corner bar and who connect through apps and shared online experiences, not proximity or events. Customers in a retail center might not walk out if the network hiccups, but that's not true of Starbucks. If a visitor stops in for some Internet and a coffee, a flapping connection is an incentive to leave and will be remembered.

We're all becoming ISPs

Increasingly as admins, we're discovering our businesses are getting into the customer bandwidth business, as we each become our own free wireless ISP. BYOD is actually pretty simple in the end because we own the air, the hardware and can gently shame employees into compliance because it's technically a perk, not a right. But today, healthcare, retailers, government offices, movie theaters, restaurants, venues, banks, bookstores, Laundromats and gyms have discovered that free Wi-Fi makes visitors happy -- if they can keep them online. And for most of those businesses, WLAN is certainly not their core expertise. 

Recently I spoke with a representative with a shopping center property management group that operates 50 malls. Its aggregate peak visitor bandwidth, subtracting lessee traffic, is approaching nearly 500 Mbps and growing. He thought they'd mostly be worrying about parking and access, not ensuring ubiquitous network quality to tens of thousands of daily visitors. That was the shift the group was experiencing as it became not a retail manager, but a wireless ISP.

As a result, it is investing in its wireless infrastructure, as great free Wi-Fi ranks near the top of visitor satisfaction reports. And satisfied visitors, incidentally, lead in turn to higher rent premiums. In other words, great networking is driving the bottom line for malls, just as it is for Starbucks. And like many previously storefront-only businesses, we must all reconsider our customers' connectivity requirements. To meet this new challenge of quality of experience expectations, we'll need not only new expertise, but also the right tools for the job.

You may never have been in the ISP business before, but your customers -- especially potential new customers in the most attractive demographics -- may well want you to be. Hey, even my tire store gets it -- VPN and remote desktop are working just great from its lavishly appointed waiting room.

Next Steps

How to use QoE to boost mobile user satisfaction

How to setup wireless ISP

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This was last published in December 2015

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