PR Communications

T-Mobile hits big with coffee & Wi-Fi

Every time I see an article about Wi-Fi access, I read or hear the name T-Mobile and the company's hotspot service in Starbucks coffee shops. T-Mobile is probably not making money yet on it's hotspot service at Starbucks. T-Mobile is working to build a business model that does generate profits.

I wager if you add up all of the ink that has been written on the service in articles about Wi-Fi access in the last year, T-Mobile has made a profit on the publicity generated since the company launched its' partnership with Starbucks in August 2002. As one of the smaller wireless telephone companies in the US*, making waves by being the primary hotspot provider to Starbucks gives T-Mobile a PR tactical advantage over its bigger rivals. Deutsche Telekom had earlier bought VoiceStream Wireless, and changed the company's name to T-Mobile. The Wi-Fi move has been a great PR strategic success. Interest about the growth of the Wi-Fi industry amongst the technology media intelligentsia is great, by design or inadvertently T-Mobile's partnership with Starbucks has increased brand awareness of its new name and wireless services.

The real reason for this PR success has been the relationship with Starbucks; I see a correlation between Starbucks successful promotion of the board game "Cranium" in its stores and the T-Mobile success story. The founders of "Cranium" were unable to get many major toy retailers to sell their products, after thinking about where their audience hung out...at Starbucks coffee shops. The "Cranium" founders signed a deal with Starbucks to market their game and a successful board game was born.

* DEUTSCHE TELEKOM AG's SECURITIES AND EXCHANGE COMMISSION Form 20-F/A filing

In the United States, T-Mobile USA/Powertel operates the smallest of the six national mobile networks in terms of subscribers. T-Mobile USA/Powertel faces intense competition in the United States mobile telecommunications market from the national mobile providers, Verizon Wireless, Cingular, AT&T Wireless, Sprint PCS and Nextel, and from some regional operators. The market share of T-Mobile USA/Powertel is approximately 7.2% at December 31, 2002, compared to approximately 5.3% per end of 2001. Most of these competitors have been operating in the U.S. mobile communications market for a considerable time prior to the entry of T-Mobile USA/Powertel’s predecessors, VoiceStream and Powertel, into the market.

Related Links

TelephonyOnline.com, Jul 3 2003 "Starbucks says Wi-Fi’s a hit" By Dan O’Shea

Silicon.com July 1st 2003 Gartner: Many hotspots may never be profitable in own right

e-principles.com, April 2003, "WiFi – A Suitable Case for Business?"

Wi-FiPlanet.com, 28th Feb 2003, "T-Mobile Cut Price of Wi-Fi"

AdAge.com, 27th Jan 2003, "THE RISE OF WI-FI MARKETING More Explore the Reach of Free Wirless Internet Access"

TechnologyReports.net, 21st Jan 2003, "Uncommon Markets: T-Mobile’s elusive Starbucks exclusive"

SFGate.com, 14th Nov 2002, "Wireless Access With Your Latte? Will Starbucks' new T-Mobile push indie coffee houses off the map?"

SiliconValley Internet.com August 21, 2002, "Starbucks Serves Up WiFi Access"

All T-Mobile and Starbucks images are owned by their respective companies.

What is the next consumer Internet frustration?

The top four ISPs (minus United Online - Juno & NetZero) dominate the media with publicity about the latest consumer frustrations with the Internet. SPAM, a virus's and pop-up ads are all being squashed by the country's largest ISPs.

Ross Rubin of ZiffDavis site, wireless supersite, discusses SPAM on portable wireless devices, and how the big three ISPs are all fighting SPAM, in his article "Wireless Carriers Need to Step Up the Spam Battle," August 26th, 2003. http://wireless.ziffdavis.com/article2/0,3973,1230502,00.asp

The question is why are these large ISPs bothering with SPAM and other Internet frustrations? Well hundreds of millions of dollars of free publicity. AOL, MSN and Earthlink all have sophisticated PR departments churning out stories about consumers frustrations with the Internet, and how their company is providing a solution to the consumer's latest Internet problem. Consumers don't just see ISPs as the connection to the Internet, but now as the trusted advisor who will help them navigate their way through the perils of the Internet and vanquish their frustrations. Those ISPs who can recognize a new consumer Internet frustration and spend the time.. and money on good media outreach will reap the benefits. You might think that only large companies the have the advertising budget and sophistication to conduct PR campaigns that influence an entire market's audience. However, just because you are big does not mean you always follow a successful PR strategy. Consider this, United Online is the third largest ISP in the US, yet if you review tech media for the last two years there are no articles about how United Online is solving their consumer's frustrations with the Internet. The reason: United Online is a lean ship (only 400 employees) and has not yet realized how spending on PR that target's their audience's frustrations with the Internet will reap rich rewards.

AOL, MSN and Earthlink will continue to bring solutions to consumers' problems with the Internet as part of their PR strategy to demonstrate the value they provide to their customers when they solve their customer's frustrations with the Internet. Maybe the next ISP PR opportunity is SPAM on your wireless device? I don't know, but I do know that any company can achieve amazing PR results by thinking about what current customer problems they can solve and implementing a PR strategy to publicize that solution.