Google + Starbucks Is a Match Made in Heaven

This move makes a lot of sense for Google

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Google + Starbucks Is a Match Made in Heaven

Besides dominating web search and transforming into a consumer electronics powerhouse, Google (GOOG) also has aspirations to become a leading Internet service provider. Google Fiber is rolling out cheap, wicked-fast gigabit home Internet connections that are 100 times speedier than broadband. Project Loon, Google’s “Internet for everyone” initiative, envisions high-altitude solar-powered balloons delivering Wi-Fi worldwide, covering rural and remote areas, filling existing coverage gaps and providing Internet access in times of disaster.

And it looks like Google’s just getting warmed up.

News recently broke of a new Google as ISP development that’s going to deliver Wi-Fi to millions of Americans: AT&T (T) has been given the boot as the Wi-Fi provider for Starbucks (SBUX). Replacing the telecommunications giant, with Wi-Fi service at 7,000 U.S. Starbucks locations — and delivering web access promised to be 10 times faster than current service — will be Google.

AT&T has been the ISP for Starbucks since 2008, when it signed a deal that turfed T-Mobile. According to CNET, those Starbucks outlets are now connected via T1 lines that provide speeds of up to 1.5 megabits per second. That speed might have been fine in the days of checking email and web browsing, but with smartphone users getting accustomed to watching streaming videos and sharing high-resolution photos with LTE wireless speeds that average in the 10-20 Mbps range, 1.5 Mbps seems woefully inadequate, even for a free service.

Google is partnering with Level 3 Communications (LVLT), the network provider whose infrastructure makes it one of the largest IP transit networks in the country and a Tier 1 Internet provider. Tier 1 ISPs are not reselling Internet access, they’re directly connect to the backbone of the Internet — in the U.S., AT&T is also classified as Tier 1, as are several other telcos including Sprint (S) and Verizon (VZ). In The Wall Street Journal, Level 3’s CEO noted that his company “will do the network stuff.” That is, Level 3’s network will be the one those Starbucks locations are connected to as the rollout begins over the next month (wrapping up in about 18 months).

CNET says AT&T also offered 10-times-faster network speeds in a proposal to Starbucks and still lost out on its bid to remain the coffee chain’s ISP. Why?


Article printed from InvestorPlace Media, http://investorplace.com/2013/08/google-starbucks-ventur-goog-sbux/.

©2014 InvestorPlace Media, LLC

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