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by Paul Kiser
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Today I’m dressed like a Starbucks employee to honor the wisdom of the decision-makers at the famous coffee company to team with AT&T to offer free WiFi to all. They started it on July 1st. It is a smart move…a very smart move.
Why? There is one common aspect of every successful business and it is simply to give your customers a reason to love you. That’s it! Customers who love a service or product is an absolute ‘must’ if you want to build customer loyalty and business referrals. You can spend millions of dollars in advertising and not get the return that a company gets with requited love from their customers. With free WiFi Starbucks has found a way of creating value-added service that will cause many people to love Starbucks.
If you have a ‘butts-in-the-seats’ type of business and you want customers to: 1) frequent your location, 2) spend time and money in your business and, 3) be loyal to your business then free WiFi is one of the best ways to make it happen. Here’s what will happen for Starbucks over the next 12 months.
- Starbucks will see increased traffic of laptop users (a ‘small’ market of people who will buy almost 200 million laptops in 2010)
- Starbucks will see more repeat business
- Starbucks will be more visible to more people
- Starbucks will not need to spend as much on advertising and will get more social media publicity
All butts-in-the-seats organizations would like to experience these four outcomes in their business, so why don’t more places offer free WiFi? In brief, the answer is ‘accountant-think’, which is always short-sighted. The common rationale is one of two issues. First, instead of seeing free WiFi as an inexpensive way to add value to their service the accountant-think business people try to make it a revenue source. In Reno, Nevada the major hotel/gaming properties have been known to charge as much as $500 to ‘turn on’ WiFi in their convention areas and most of the properties charge around $13/day for guests to have access to WiFi. The result is that technology conventions go elsewhere rather than be charged for a service that they can get for considerably less (or free) in another market. The Reno gaming properties have boxed themselves in with contracts or dependence on the revenue source from WiFi, so they are now in a death spiral of losing more and more business or give up a piece of their dwindling revenue.
Last year I was in Las Vegas on a business trip and stayed at the South Point property. They charged a fee for WiFi, so I went to Starbucks to get online (my home account is with AT&T, so I’ve always had free access at Starbucks.) Afterward I picked up dinner at the Outback Restaurant next door and took it back to my room. South Point didn’t get me to stay on property, nor did they even get me to eat at in-house, simply because they didn’t offer Free WiFi. Is that a smart business move on their part? Nope, just good, solid accountant-think.
The second rationale accountant-think executives is that WiFi customers don’t have a revenue impact. In August of 2009, Erica Alini wrote an article for the Wall Street Journal (NOTE: the Wall Street Journal or WSJ is a historical archive of old business trends written by accountant-think reporters) that declared, “Coffee Shops Pull the Plug on Laptop Users.” For her article Ms. Alini cites three examples in New York that discussed limiting or eliminating laptops at a cafe or coffee shop. The most common problem seemed to be too many customers … what a tragic problem … and that some laptop users were purchasing minimal product. However, Ms. Alini admits that some places were using laptop users to ‘make the place look busy.’
A deserted restaurant is cause for people to avoid the business, so having customers, even minimal revenue producing customers, can mean more paying customers. My question is how much would a coffee shop have to pay people to sit and look like customers? Free WiFi is a small price to pay. I spend $10 to $15 per day at my Home Starbucks on Keystone in Reno, NV, USA. It will not make me a shareholder, but it is money I would not spend in one place, except for the fact that I am a captured customer. I also always meet with people at a Starbucks, so I bring in additional customers. The major factor in my customer loyalty is the access to free WiFi.
Starbucks has made a very smart business move with making free WiFi a value-added service for all and the return on the service will reap big dividends in customer loyalty and increased traffic (butts in the seats.) Starbucks customers have a new reason to love Starbucks and that is key to survival in today’s world. But don’t try telling that to the accountant-think executives running other stores and restaurants. They just won’t understand it … and I’m sure that’s okay with Starbucks.
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PLEASE SEE MY REPLY TO THIS COMMENT (PAUL KISER)
But dear, i’ve seen a post saying free wi-fi isn’t safe at all.
check this post for me please.
<a href="http:// (URL link disable because of misinformation)
(NOTE that the ‘POST’ this person refers to is her/his own)
Paul Kiser said:
ALERT TO ALL READERS
This comment is from ‘Sue Japan’ in Beijing, China (both are impossible to verify) and refers the reader back to ‘her’ blog that says that a law in Wales, GB can make the owner of a business liable if someone commits an e-crime on their WiFi network and encourage business owners to have the most updated encryption code software on their network.
This comment seems to play on the myth that Free WiFi is unsafe. Let me be absolutely clear…All Internet traffic is subject to capture and misuse by hackers/criminals regardless of whether it is WiFi or Hard-wired. Free WiFi is at no greater risk of capture or misuse than paid-for WiFi and anyone who proposes that Free WiFi is less safe than pay-WiFi is not being truthful, and may have a monetary motive to cast Free WiFi in a negative light.
Every bit of Internet traffic goes through servers that have ‘sniffer’ programs looking for key words and numerical combinations (Social Security or Credit Card info). There is no ‘secure’ public Internet. All Internet (and phone) traffic is likely monitored by the FBI/CIA for key words that may indicate a terrorist/criminal intent. The idea that Free WiFi is less private than pay-WiFi is absurd. You can protect your computer to some extent with a good Firewall, but even that can be hacked by a pro.
If you are going to use the Internet (or a phone) you have to understand that there is no such thing as privacy.
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Just curious…have you found anything related to what type of liability there would be on Starbucks if someone downloaded copyrighted material using their wifi service? Most ISP’s will note the IP address associated with the account but they don’t document information like MAC ID’s that help to identify which SPECIFIC computer performed the illegal download. I just wonder what type of liability our businesses could be incurring by offering such a userful service.
Paul Kiser said:
Zip, None, Nada. Starbucks is liability free.*(1)(2)
*I am not a lawyer and therefore this is opinion, not legal advice.
(1) Corporations will sue for any reason and sue anyone, so liability or not, it doesn’t mean that someone out there with an attorney on retainer won’t file a lawsuit.
(2) There are always exceptions.
Why do I feel that Starbucks (actually it is Yahoo! that is the ISP), or anyone offering free WiFi is safe from legal action of the users?
First, Starbucks has a ‘Terms of Service’ agreement that anyone logging on their network must agree to and part of that agreement is as follows:
There is more to their ToS Agreement, but Yahoo! has done their due diligence by making this statement, so anyone suing Yahoo! or Starbucks would have to argue that a binding agreement with the user to not illegally download copyrighted material was insufficient, and that is a pretty ridiculous argument.
Second, why would Starbucks or Yahoo! have any greater liability than a paid service? It could be argued (and I certainly would) that Boingo, TMobile or any other rip-off, pay-for-Internet service has a greater liability because they profit from the user, therefore, they have a greater responsibility to monitor and prevent illegal downloads. Taking the argument farther, where would liability stop if the ISP was responsible? The Internet consists of public and privately owned servers that allow users to download copyritghted material, so why aren’t they liable?
Finally, free WiFi is a service that benefits the community and courts tend to protect Samaritan-type service that is for public good.
Again, this is my opinion and mega-corporations like Sony love to scare people in order to protect their mega profits, so until it gets to court no one really knows what the liability is or isn’t. But, quite frankly I think any company that would try to sue Starbucks or Yahoo! for an onsite user’s illegal activity is risking a counter-suit for filing a nuisance lawsuit. It’s that obvious that they are not liable.
Thanks for the question!
Pat B said:
Paul, I was doing some research and stumbled upon these comments and had some follow up questions for you. If someone used free WiFi to download pirated material, yes, AT&T has the user agreement, but there is no way to track who downloaded the material. So since routers don’t assign IPs and the furthest down the chain the government/Hollywood/etc could trace would be starbucks/AT&T, how would they not be held liable? The government/Hollywood/etc will want to pin their lawsuit on someone and with how free WiFi works, particularly at Starbucks, there is no way to track users. With pay accounts you have the users name and credit card and all of that is verified upon signing up, therefore very easily tracked.
Paul Kiser said:
I’m not an attorney; however, if I understand your argument, the logic of the issue fails to make a sense. Any corporation or government would have to have prove a crime occurred. That evidence is not that the material was taken, but that it was obtained illegally and used in violation of their copyright. The user would have to be identified and it would have to be verifiable that they used the material in violation of the copyright. The method used is probably not relevant unless someone can make a case that the makers of the computer, the makers of the router, the makers data lines, etc. were complicit in the crime. Any provider of WiFi service cannot reasonably be held complicit just because they offer a service. Using your argument I could make a case against a phone company because bank robbers used their phones to plan a robbery, but that we don’t have any proof of the conspiracy, nor do we know who was on the line during the call. Do you see why your argument lacks a logical basis for a WiFi provider to be held liable?
There are a lot of people who would like to paint free WiFi service as a danger (pay WiFi, for example), but free WiFi is here to stay, and Starbucks has shown it is a solid business model that brings in customers.
Thanks for reading the article and commenting.
Pat B said:
Paul, for some reason there isn’t a reply button on your last comment so I will write down here. I do see how my argument doesn’t make complete logical sense and I do agree with what you said. The reason I made the case I did was because of the following case that occurred in the UK. I know the UK is not the US, so this may not be something that US WiFi providers would have to be concerned with, but it is the reason I initially made the case I did.
Do you think this situation could arise in the US? I am someone interested in providing free WiFi actually and trying to make sure I don’t fall into the same situation in the link or any other legal battle that could become quite costly.
I love your answer Paul. I have been trying to find information from someone educated in this area or at least researched it and I haven’t gotten a lot of depth until now.
I agree with your answer out of common sense only but this really gives some meat to the argument. Thank you for connecting the dots for me in a clear and concise manner.
Paul Kiser said:
I have good days and bad days. I’ll count this as a good one. I’m glad my opinion was helpful, and thanks again for the question and the response!
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