Caribou's Free, Wandering Wi-Fi
August 29, 2006
The cafe chain is leaving behind pay partners to work with a new provider of free Wi-Fi (at least for an hour).
A couple of years ago, the Caribou Coffee chain was a big win for the SBC FreedomLink hotspot service. SBC was going to put equipment in 300 of the cafes around the United States and charge as little as $8 for 24 hours of unlimited access to the network.
Two years later, SBC FreedomLink is now AT&T Wi-Fi. And while the Caribou locations are still listed as part of that network, that's not likely to be the case much longer. Caribou has signed on a new provider to give its customers wireless access. That access comes at a much better price, at least for light users: free service for an hour, after which customers are asked to make a purchase of at least $1.50.
Wandering Wi-Fi, a hotspot provider based in Atlanta, is upgrading all the equipment SBC had installed in Caribou's venues. "Two years is a long time in a technology era," says John Marshall, president of Wandering Wi-Fi. He says with new equipment supporting the latest versions of 802.11g, "we can do new services. No one knows what'll happen with voice over Wi-Fi, but we wanted a platform in place."
Caribou Coffee CEO Michael Coles says the deal they had with SBC/AT&T had nothing to do with the decision to offer some free access. "We wanted a free model for a long time," he says. "We wanted someone to help us with management, and the relationship with Wandering gives us a great partner."
There weren't many complaints made about the for-pay system with SBC/AT&T, according to Coles, so why offer free service at all? "It's a service we need to offer customers," Coles says. "It's an amenity that creates a differentiating point.... I think the free model is an amenity that, in the future how long that will be I don't know customers will expect to find."
Caribou's headquarters is in Minneapolis, Minnesota, a city that just this week announced a partnership with US Internet to install a citywide Wi-Fi network. Coles cites this development as "the future," with Wi-Fi available wherever you want it.
The $1.50 purchase the service requires after an hour of free use doesn't translate to $1.50 per hour, Coles insists, since that purchase also covers the first "free" hour any user can get. In that time, customers can upload or download to their hearts' content. Caribou feels the price is fair, as $1.50 is the low to average price for a cup of coffee in a Caribou Coffee cafe. Each hour, users will have to buy another small cup (or more) and request a code they can enter for continued use. Wandiering Wi-Fi isn't providing any all-day, weekly, or monthly subscriptions. At least, not yet.
Caribou and Wandering Wi-Fi are on the same page when they say the technical and business model has to have room to evolve. For now, the goal is to make it straightforward and simple. "If they enjoy it, they make a purchase," says Marshall. Simple as that.
The feedback they got about the model while trying it in a couple of test markets, including stores in Omaha, Nebraska, was "phenomenal," according to Coles. "At least for now, it's the right model," he says. "Going forward, this will likely change.
One unique approach Wandering Wi-Fi is taking with security is to do an outgoing e-mail relay. While some hotspots just shut off the ability for customers to use the SMTP protocol to send mail, Wandering will shunt that traffic through their data center. The mail can go out, but it's filtered enough to protect Caribou's network from being used to send mass mailings or spam. "It's something a lot of hotspots aren't doing," says Marshall.
(Of course, hotspot users can always use a service like JiWire's Wi-Fi Mailer, which will allow as many as 200 messages to go out per day using your regular mail client software, even when SMTP is blocked.)
Of course, customers will also get offers from Caribou at sign-in, like offers for premium items or requests to opt into coupon programs.
The number of Caribou venues currently converted to the Wandering Wi-Fi network is about 340, approximately 81% of the 416 Caribou locations found in 16 states and the D.C. area. Coles says hotspot service from Wandering will go into "100% of the stores where it is appropriate," as a number of Caribou locations are in spots where installing Wi-Fi might be impossible or restricted, such as malls or airports.
For Wandering, this deal means about 1,000 total hotspots in the United States. Marshall declined to comment on where its other locations are or the names of any other partners, saying, "We prefer to stay under the radar."
So what about the AT&T Wi-Fi users that expect to get access in Caribou locations? Eventually, AT&T should tell them not to look for it. Marshall says right now they have no roaming agreements in place with anyone, not even AT&T, "because the focus is on the free service. We may take that into consideration, but for now, its a nice, easy, free service without any complications."
Just don't forget to buy some coffee.