Google (NASDAQ:GOOGL) just might be serious about the whole Internet service provider idea. Forget about the test markets in Kansas City, Austin, and Provo -- Big G is going nationwide. Starting right now, Google is rolling out high-speed Wi-Fi services to provide fast, free Internet connections in 7,000 Starbucks (NASDAQ:SBUX) locations. It's available only at company-owned locations at this point, though I'd assume that franchises will follow suit eventually.
The first Google-branded Wi-Fi locations will start popping up this month, followed by a nationwide blanket rollout over the next 18 months. Google says that the new service will be at least 10 times faster than Starbucks' existing networking partner, AT&T (NYSE:T). if you happen to visit a Starbucks in a Google Fiber city, you should expect a hundredfold speed increase.
Google and Starbucks will lean on backbone operator Level 3 Communications (NYSE:LVLT) to deliver the high-speed service, but I can't help but assume that Google's own fiber network will play a part in, say, Kansas City. Why not tap into an in-house solution that's running by the curb anyhow?
Ma Bell will continue to serve Starbucks customers while the new network is being implemented, according to a Starbucks statement. The old service and the new one may differ in speed but otherwise share many attributes: Both are free to use without passwords or subscriptions -- and no download caps.
The West Coast partnership stretches beyond just a simple Wi-Fi service. The two companies will also partner up to develop a new Starbucks Digital Network, which is the coffee chain's brand of in-store digital entertainment. Google certainly has some media assets to contribute via YouTube and the Google Play music/movie store. Starbucks brings the eyeballs and ad-clicking fingertips.
Remember when in-store Wi-Fi was a big deal that could set you apart from disconnected rivals? This would be the next generation of that competitive advantage. If a data-hungry consumer is ready to flip a coin between Starbucks and some fast-food joint across the street, this bonus feature just might tilt the coin toward Seattle.
For Google, it's still all about putting the Internet in easy reach for everybody, everywhere. More browsing means more ad clicks, which translates into more Google revenue. And it doesn't hurt to have your brand name associated with a free, convenient, and high-quality service in 7,000 highly visible locations. Mind share is market share, dude.
And if this works out, I'd imagine that other chain stores will have to match or beat the Starbucks service. This could be the beginning of Google building a serious networking presence on top of its already huge services. Level 3 would be happy to follow along.
Losing Starbucks is no skin off AT&T's nose. The service was supposed to be only partly free with charges clicking up for heavy users. But that approach never appealed to Starbucks customers, resulting in the completely free service you see today. It was never the money maker that Ma Bell wanted it to be. Now let's see if Google can do better.
The Motley Fool owns shares of Starbucks and Google. Motley Fool newsletter services have recommended buying shares of Google and Starbucks and writing covered calls on Starbucks. The Motley Fool has a disclosure policy.