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Free Wi-Fi: Should Retailers Offer It to Customers?
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Customers now expect complimentary Wi-Fi Hotspot connectivity, but many businesses such as Starbucks, McDonald's, Borders and Panera Bread are taking varied approaches to offering up and paying for Wi-Fi service.
Wi-Fi hotspot service inside fast-food restaurants, coffee shops, book stores—and any other establishment with tables and chairs—has become a standard fare these days. But what isn't so standard is whether customers should pay for the wireless connectivity service or businesses should provide it for free—just like napkins and packets of ketchup.

When looking at four businesses' Wi-Fi business models—Starbucks, McDonald's, Borders and Panera Bread—one sees a range of connectivity prices, service and payment methods, and underlying customer-relationship strategies.

Wi-Fi, Pay As You Go and Free

Starbucks still charges by the hour via its new provider AT&T, but loyalty-card-toting customers can now get two hours of free service a day. McDonald's charges $2.95 for two hours of wireless Internet access through provider Wayport. Borders Books & Music, via T-Mobile, has varying hourly plans as well as day passes for $9.99. And Panera Bread, in contrast to others, charges nothing to use its hotspots. (Naturally, most businesses serving up Wi-Fi these days also offer deals, tied in with service providers such as AT&Tand T-Mobile, for monthly subscription plans.)

Wi-Fi hotspots aren't just confined to retail and coffee joints, however. Hospitals, airports and hotels are three other classes of businesses that offer wireless connectivity in and around their facilities.

The more time customers are sitting at your tables, the more money they are going to spend in your stores. And offering wireless access to the Internet for those customers with a Wi-Fi-enabled laptop or smartphone will add even more sales to the bottom line and make customers more loyal to your brand. That's the theory, anyway.

"Obviously, it's a part of Starbucks' strategy because it builds community. It's clearly a part of Borders proposition: The longer you sit there, the more books you'll buy. It's a part of Panera's value proposition because I think they'd like to increase average transaction value and get loyalty at the same time."

Complimentary Wi-Fi, But with a Catch

The Borders bookstore chain charges for Wi-Fi through T-Mobile, which takes care of the backend IT and network management. The amount that customers pay varies according to the length of service they want.

Starbucks offers a number of payment options for its Wi-Fi service. At the base level, two hours will cost customers $3.99. However, the coffee purveyor has recently announced ways to get "complimentary" Wi-Fi service, taking great pains to not use the word "free." The most notable method is that customers who registered their Starbucks Rewards card and agreed to receive four marketing e-mails per year from service provider AT&T can receive 2 free consecutive hours of free Wi-Fi access per day. Customers must use their rewards card—to make a purchase or load more money on it—at least once a month. Also, AT&T's more than 12 million DSL customers can get free Wi-Fi at Starbucks.

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