The Bellevue, Washington based cellular telecommunications provider, T-Mobile USA last week sued the Seattle, Washington based Starbucks Corporation accusing the coffee behemoth of a breach of contract by allowing AT&T to provide customers with free Wi-Fi access in its cafes.

According to a complaint filed Thursday in New York State Supreme Court in Manhattan, T-Mobile accused Starbucks of "secretly" developing a plan with AT&T to provide Wi-Fi at its cafes, despite an exclusive partnership with T-Mobile. Seeking unspecified damages, T-Mobile alleged that Starbucks broke the agreement by switching over to AT&T.

Under the agreement, T-Mobile said, it had the exclusive right to "sell, market, and promote" its services in Starbucks stores. The cellular telecommunications provider said that it was currently bearing the brunt of the cost of the service because it was providing the technology and equipment in all but two of Starbucks' U.S. markets--the San Antonio, Texas, and Bakersfield, Calif., markets.
 
Starbucks ended its seven-year partnership with T-Mobile in favor of an agreement with AT&T in February. According to a transition agreement reached in February, T-Mobile was given the exclusive right to "sell, market and promote its services" in Starbucks stores until those stores were fully converted to the AT&T system.

According to the lawsuit, Starbucks stores would be converted "on a market-to-market basis" and T-Mobile was to retain the exclusive right to market and sell its Internet services until a market had been fully converted.

The lawsuit said, "T-Mobile had made a very significant investment in the technology and equipment necessary to provide Wi-Fi service in the many thousands of Starbucks stores in the United States.”

Starbucks in June began offering two hours of free Wi-Fi Internet service thru AT&T to customers who purchase a Starbucks Reward Card with a minimum $5 credit on it. AT&T therefore benefited from the agreement prematurely and at the expense of T-Mobile.

The lawsuit said, "Starbucks and AT&T ... secretly developed a promotional plan under which they would offer 'free' AT&T/Starbucks Wi-Fi even in stores that were still reliant on T-Mobile's infrastructure.”