The wireless mobile phone service is a highly lucrative business. Now the competition is heating up with the expansion of service from Wal-Mart Stores Inc. (NYSE: WMT) service.
Walmart will offer prepaid mobile phone service for $30 for 1,000 minutes and $45 for unlimited calling. Walmart will expand service to 3,200 stores from 234. Response to the initial launch was "overwhelming," said Walmart.
The prepaid service is convenient because there are no long-term contracts and no penalties for early termination. It is convenient if you need a phone for a short time while traveling or attending school or college for a specified time, or any other situations where you do not need long-term service. In addition, since it is prepaid, there is no monthly bill that has to be paid.
The service runs on a network of Verizon Communications (NYSE: VZ) and Vodaphone Group (NYSE: VOD).
This launch will put pressure on already existing services, notably Leap Wireless (NASDAQ: LEAP) and Metro PCS (NYSE: PCS). Both stocks were down on Friday with Leap falling 23 cents to $15.17 and Metro PCS down 18 cents to $7.36.
What we are seeing the wireless segment is much like what happened to the PC market over the past five to ten years. Where laptops were once over $1,000, now many can be purchased for about $400.
The lesson here is that volume distribution can drive down prices, which in the long run will benefit the consumer. Walmart has the distribution network to drive down prices and force competitors to take another look at their pricing policies.
Do you believe that wireless charges will keep falling?
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Reader Comments (Page 1 of 1)
10-17-2009 @ 10:22PM
laruemary said...
Nice Try Connie. I am so over these posts about LEAP and Metro facing competition. With every Walmart article, it is becoming more and more obvious. If you ask me, I think it is the other way around; LEAP and Metro will put pressure on Wally World. Get real lady. And don't think for one second that you are going to get LEAP much cheaper than it already is.
10-18-2009 @ 12:51AM
sykiks said...
What is so great about this pricing? Cricket has unlimited calling for $30 a month prepaid, for $45 a month you get unlimited calling, unlimited text, pics, mobile web, unlimited 411 calls and more....with your first month free. They also have true unlimited wireless internet for $35 a month with phone service...also first month free. Best thing is you don't get hit with all the hidden fees that other carriers hit you with.
10-19-2009 @ 12:35PM
truckmommaw said...
This type of service is absolutely great for anyone who uses a cellphone. Wal-Mart, with thousands of readily-accessible retail outlets around the world, is the perfect site for mass distribution of this type of product. One thing is for sure, Verizon and AT&T will feel the heat pretty soon. I am tired of paying inflated pricing for service currently available from Verizon. I am trapped in a Verizon 2-year contract and will save money even if I walk from the contract.
10-20-2009 @ 7:08PM
PrepaidWirelessGuy said...
It's great to see competition, but I agree that while this is a good offer, it's certainly not mind blowingly new. For a full comparison of major providers, feel free to use this free resource: www.prepaid-wireless-guide.com/compare-prepaid-plans.html