• by Wendy Davis  @wendyndavis, June 10, 2008

Starbucks' decision to roll out free Wi-Fi from AT&T has left a bitter taste with former partner T-Mobile.

The coffee chain's move allegedly violates a four-month-old contract aimed at ensuring a smooth transition from T-Mobile to AT&T in Starbucks stores, according to a lawsuit filed last week in state court in New York.

Starbucks announced in February that AT&T would replace T-Mobile as the Wi-Fi provider for coffee shop patrons--but the deal was supposed to roll out gradually, one city at a time, according to T-Mobile's lawsuit. T-Mobile alleges it was supposed to remain the sole Wi-Fi provider at all Starbucks in particular markets until every coffee house in that locale had replaced T-Mobile's access lines and equipment with those of AT&T.

So far, the only markets in which all Starbucks now have AT&T equipment are Bakersfield, Calif. and San Antonio, Tex., according to the complaint. The transition period was supposed to last until January 2009, T-Mobile alleges.

But last Tuesday, Starbucks launched a nationwide loyalty program that offered customers two free hours of Wi-Fi per day through AT&T at all of its coffee houses. T-Mobile typically charged either $6 an hour, $10 a day, or $40 a month for Wi-Fi at Starbucks.

In its lawsuit, T-Mobile alleged that the new Starbucks-AT&T program violates T-Mobile's own contract with Starbucks, and potentially strains its wireless local area networks (WLAN), since many Starbucks locations haven't yet deployed AT&T equipment.

"The provision of 'free' Wi-Fi services ... dramatically expands the universe of potential Wi-Fi users of T-Mobile's WLAN Network, creating the risk of spikes in usage, drains on that network and T-Mobile's resources, and therefore causes delays, frustrations and other harm to all users of T-Mobile's network," the lawsuit alleges.

T-Mobile asked the court to issue an injunction against Starbucks and award damages for breach of contract.

A Starbucks spokesman said in a statement that the company aims to ensure Wi-Fi access. "This is a benefit offered to our Starbucks Card Rewards members as well as AT&T subscribers and steps are being taken to ensure that this access continues."