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Google, Starbucks Start AT&T Router Swap

Sarah Thomas
8/27/2013
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Along with $11,000 Clover coffee machines, Starbucks is swapping out all its old routers as part of its deal to switch from AT&T's WiFi to Google.

Starbucks announced earlier this month that it would be ending its five-year relationship with AT&T Inc. (NYSE: T) to bring in WiFi service from Google (Nasdaq: GOOG). Spokespeople for the coffeehouse and software giant confirm to Light Reading that they will be installing new routers to replace all the old as they roll out "the faster WiFi with Google." (See Is Google the New WiFi of Coffee Snobs?)

"However, like with many of our vendor agreements, we are not disclosing the router vendor," Starbuck's spokeswoman adds, echoing Google's sentiments.

The companies also haven't said whether the new WiFi routers will include the zippier 802.11ac connectivity, capable of supporting speeds up to 1 Gbit/s.

AT&T has more than 32,000 WiFi hotspots deployed across the US, and it works with a number of router vendors on the deployments. Losing Starbucks as a customer knocks off 7,000 of those, but it's also a blow to its router partners.

While Google wouldn't reveal its router partners, it is worth noting that, as of March 31, the software giant was a 5 percent shareholder in Ruckus Wireless Inc. via its acquisition of Motorola. Google closed on the sale of Motorola Home, which includes its cable TV and Internet devices, to Arris Group Inc. (Nasdaq: ARRS) in April, so it's unclear whether Google is still holding on to any stake in the WiFi vendor. If it is, that could have some influence on its choices. (See Arris Secures Motorola Home.)

Curious minds will be able to find out soon enough. Google and Starbucks are beginning their upgrade this month and expect the router overhaul to take 18 months to reach 7,000 of its locations across the US.

— Sarah Reedy, Senior Editor, Light Reading

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sarahwallace
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sarahwallace,
User Rank: Light Beer
8/29/2013 | 12:42:28 PM
Re: switchover
I do believe Starbucks is doing a full switchover, will be interesting to see how it plays out and if users even notice a difference...
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
8/28/2013 | 2:59:01 PM
Re: Cisco it is!
Great work, Alex! I meant that Cisco was for AT&T's deployment. It's the one being replaced with Aruba. Seems like a big boon for them. 
alexboone40
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alexboone40,
User Rank: Light Beer
8/28/2013 | 2:16:09 PM
Re: Cisco it is!
Nope -- not Cisco.  That must be the legacy stuff that's getting upgraded.   Aruba Networks was asked about this during their wall st call last week:

http://seekingalpha.com/article/1652922-aruba-networks-management-discusses-q4-2013-results-earnings-call-transcript?source=yahoo
Sanjiv R. Wadhwani - Stifel, Nicolaus & Co., Inc., Research Division
Starbucks is refreshing its Wi-Fi infrastructure here, and checks are showing that Google is going to go with Aruba. I was wondering if you could comment on that and I'm wondering if you're seeing any opportunities of that kind in the U.S., and globally, with restaurants perhaps moving more towards Wi-Fi to enhance customer experience.
Dominic P. Orr - Chairman, Chief Executive Officer and President
And regarding the specific North America, the Starbucks, Google deal, all I can tell you is Aruba products were provided, and to be provided, to replace the incumbent for the rollout of the Wi-Fi services in all the Starbucks in the United States. This is just starting and it is going to be a multi-quarter effort.
Sanjiv R. Wadhwani - Stifel, Nicolaus & Co., Inc., Research Division
Got it, okay. Dom, any color on this Starbucks opportunity? Is it sort of as large as what you saw with 7-Eleven in Japan? Any color on sizing would be helpful.
Dominic P. Orr - Chairman, Chief Executive Officer and President
Well, I really cannot comment on the size yet. I think you probably can count the number of stores as best as I can, and there will be much better coverage. All I can tell you is we have finished all the Canadian Starbucks stores, which is a small fraction of what is in North America, and we're starting on the U.S. portion just now.  

 
MarkC73
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MarkC73,
User Rank: Light Sabre
8/28/2013 | 11:26:39 AM
Re: Cisco it is!
Hah, maybe someone is behind on their deployment or some kind of other backlog pushing the plan back.
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
8/28/2013 | 10:08:57 AM
Cisco it is!
An enterprising community member (that's definitely getting a Light Reading t-shirt!) has discovered Cisco gear at 15 Starbucks locations with AT&T WiFi. That could be why they are not responding to me...
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
8/28/2013 | 10:07:57 AM
Re: Starbucks WiFi
I agree with you, Mark, and I think Google does too. It's admitted that even Android isn't really about mobile. It's about the eyeballs mobile can deliver for ads and search revenue. Fiber and WiFi is likely no different, though it does help to force other service providers to step up their game, which is a good thing. 

And, you're spot on that Google doesn't really have any advantages on the infrastructure side. It's just as hard for them: http://www.lightreading.com/author.asp?section_id=85&doc_id=703597
MarkC73
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MarkC73,
User Rank: Light Sabre
8/28/2013 | 2:38:10 AM
Re: Starbucks WiFi
Though Google definitely has the money and the chops to move into the carrier space, it is one of the most capital intensive and low margin spaces to get into.  Even their fiber project, and I commend them in the effort to push gigabit services and applications as well as higher speeds to the consumer, I've yet to see the margins where I'd think they would make a major push into this space.  I mean part of my commendation to them is that they spend money exploring services other carriers would not.

Google, and this is just my opinion, will find that services is where their profit will be.  Let someone else be a cheap dumb pipe, force net neutrality and SLA's, then front end that with Google services and apps.

Like someone already mentioned, even Level 3 isn't in every market (this goes for ATT as well) so you know backhaul was already not going to be ubiquitous no matter what.

What I do see Google doing which not too many other companies have the luxury doing is trying new things no matter if it's profitable or not, which means many will probably not last, but perhaps one will be the new ... well Google.

I would particularly watch Google over the top video content, I mean it's already kinda here and development will be ongoing to stay parity with Apple and with Google global caches (Google's own CDN) being deployed throughout the internet, seems like the perfect way to a jump to the consumers using existing infrastructure.  It'll be easy to use their pet projects as test beds and roll something that's truly transformational for the rest.
Sarah Thomas
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Sarah Thomas,
User Rank: Blogger
8/27/2013 | 5:39:16 PM
Re: Starbucks WiFi
Thanks for sharing, @jopocop, and good call out on the Arris Ruckus connection. That would seem to suggest it no longer has ties to Google. Too bad for Ruckus.
@jopocop
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@jopocop,
User Rank: Moderator
8/27/2013 | 5:32:45 PM
Starbucks WiFi
It is an interesting mystery.  This article is from August 4, 

 

Telecom Ramblings:  Parsing the Starbucks/Google/Level 3 WiFi Deal

Last week there was a very interesting deal that I've been trying to get my head around. Starbucks has decided that its Wi-Fi hotspots needed an upgrade, and to get it the king of retail coffee is ditching AT&T and going for a service to be provided by none other than Google and Level 3.

Level 3 will be providing the connectivity and managing the hardware, while it appears that Google will be handling the actual interface with users/customers. They'll be starting the upgrade over the next month, with some 7,000 stores to get significantly higher speeds over an 18-month roll-out.

Leaving aside the star power here, this really is a harbinger of a deal that will reverberate throughout the industry. First of all, AT&T has been feeding Starbucks' Wi-Fi with T-1 pipes, which these days barely count as broadband. To boost that by around 10x as advertised and to keep up with further demand, Level 3 will surely be using a mix of direct fiber connectivity and other tools like Ethernet-over-Copper.

One thing you can be sure of is that they won't be bringing 7,000 sites on-net in 18 months all by themselves.  As extensive as it is, their network doesn't go everywhere, and they don't have enough hands or trucks to roll even if it did go everywhere. That means there's a big opportunity here for competitive operators of all stripes around the country to get a piece of this pie.

Another thing to note here is that Level 3 is surely looking at this as a foot in the door to more of the retail sector. Starbucks is generally near, well, everything else right? Once they've got fiber close, the neighboring businesses will know about it quickly enough when the signs go up.  And how many multi-location retail outfits are often conveniently right near a Starbucks in dozens of markets?  Hmm...

But what exactly does Google get out of this? The money involved will be minor to them, but it's about the customer relationships and the wresting of more eyeballs from a monopoly controlled last mile. In light of their expansion of Google Fiber to new markets, their long dalliance with WiFi overall, and the submarine cables they've been dabbling in, they're now unequivocally a network operator in addition to being a content provider.  And given the simmering disputes between content and the last mile, the more endpoints that are free of the incumbent the better for their long term opportunities.

In fact, I think that this deal will sooner or later (and probably sooner) resurrect the rumor that Google could buy Level 3.  And actually, such a thing is starting to actually make sense even to me — and I've made a hobby out of shooting down such rumors.

Now when one views the ARRIS Website for Products, they provide a line up of Ruckus Wireless Products: 

 

Ruckus ZoneDirector Wireless LAN Controller

 

 
kaop
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kaop,
User Rank: Light Beer
8/27/2013 | 4:53:05 PM
Boingo Wireless

Boingo Wireless already offers Google sponsored free WiFi in selected shopping malls and airports.  The Boingo platform connect audiences to Google's advertising network. I wouldn't be surprised this Google deal involves some advertising incentive for Starbucks as well.

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