Starbucks Will Offer Free WiFi and New Content Deals

Starbucks (SBUX), the giant coffee chain, will offer its customers free WiFi Internet service nationwide beginning July 1, CEO Howard Schultz said on Monday. Speaking at a Wired magazine conference, Schultz said the company would partner with Yahoo (YHOO) to offer the service at its 6,700 U.S. locations.

In a press release, Starbucks said it "recognized customers' desire for a better in store WiFi experience" and said that it would turn on "one-click, free WiFi through AT&T in all U.S. company operated stores," beginning July 1.

"People increasingly use Starbucks as a home office," says Mitchell Speiser, a restuarant analyst at Buckingham Research Group. "Anything to encourage more people to come into the stores and buy drinks and food is good for consumers and the company."

"Late to the Game"

Starbucks has long tried to use WiFi access to lure customers into its stores -- and, more important, have them stick around. At present, it offers free Internet users to AT&T DSL users, as well as two free hours to users who have a Starbucks card. Others can pay $3.99 for two hours of access.

But clearly, Starbucks has finally -- if belatedly -- come around to the notion that free WiFi service across the board is a worthy investment. Many local coffee shops and restaurants around the country have offered free WiFi for years. Last December, fast-food giant McDonald's began offering free WiFi at over 11,000 of its 14,000 U.S. locations.

"'Starbucks is usually ahead of the curve on these things, but I think they were little late to the game here," Speiser says. "Everyone's offering free WiFi, so they've got to step up." The analyst says Starbucks has economies of scale working to its advantage. "They're so big, and the cost of WiFi is pretty low for them," he says, "so why not pass on the benefits to customers?"

Reading Material, Too

In addition, Schultz announced the launch of the Starbucks Digital Network, also a partnership with Yahoo, which will offer customers "free unrestricted access to various paid sites and services such as wsj.com, exclusive content and previews, free downloads, local community news and activities, on their laptops, tablets or smartphones."

Launch partners include iTunes, The New York Times, USA TODAY, The Wall Street Journal, Yahoo, Zagat and Patch, a local news service, which like DailyFinance, is owned by AOL (AOL).