Walmart Steps Into Prepaid Cell Phone Game
Retail giant offers $30 per month plan
By SCOTT GORDON
Updated 10:28 PM CDT, Mon, Oct 19, 2009
Walmart jumped head-on into the prepaid, no-contract cellular business this week with a plan as low as $30 per month.
The world’s largest retailer started selling its discounted “Straight Talk” cell phones Sunday and analysts predict it could force other cell phone companies to chop prices.
“(It’s) good for the consumer, no doubt about it,” said Stan Block, a finance professor at TCU’s Neeley School of Business. “I think other companies will drop their prices. They’ve already started.”
The $30 plan offers 1,000 minutes of talk time,1,000 text messages and limited data. A second plan includes unlimited talk, text and data for $45. Both plans provide free directory assistance calls.
The phones are bare bones and start at $29.
Walmart managers said the discount cell phones are making a big splash.
"I think it will revolutionize the cell phone business, and I think it will make some of the competitors take note,” said Marcus Ludwig, manager of a Walmart in Plano. “How long that will take will determine how well we do on this product."
The competition could squeeze profits from other cell phone providers, especially those that also offer prepaid, no-contract deals. And big-name electronics stores such as Best Buy should take notice too, analysts said.
That’s because the world's biggest retailer has a new focus on technology. For example, Walmart is selling more high-definition TVs than ever before.
"(They’re) going from socks and underwear to high-tech,” Block said. “They're still selling socks and underwear, but they're going into high-tech, too."
Walmart Steps Into Prepaid Cell Phone Game | NBC Dallas-Fort Worth
**********************************Update********** *******************
Last week we noted that Walmart had joined the wireless industry, by offering a new prepaid cellphone service and "unlimited" wireless data. In joining the industry Walmart also apparently decided to embrace the wireless industry's definition of unlimited: namely something with very real limits. Despite a website that advertises unlimited wireless data, consumer group Public Knowledge dug into the Walmart terms of service and found service that's anything but unlimited. From the "Walmart Straight Talk" phone service TOS:
Straight Talk Unlimited talk, text and data plan Features cannot be used: (1) for access to the Internet, intranets, or other data networks except as the device’s native applications and capabilities permit, or (2) for any applications that tether your device to laptops or personal computers other than for the use of Wireless Synch.
On the positive side, early indications are that unlike some other capped wireless services that claim they're unlimited, Walmart's wireless data service really doesn't come with an actual cap. Not that they'd need one; their selection of phones is fairly pathetic, consisting of the kind of old-school crippled devices that make hitting any kind of real cap nearly impossible anyway. These phones were designed for users who don't use data and the TOS reflects this. As such, this remains a good deal for some customers, despite Public Knowledge's complaints.
That said, any usage limits still need to be made painfully, obnoxiously clear to the consumer, and Walmart stating they offer "unlimited data" here is once again false advertising by the wireless industry. One would have thought this was clarified when New York's Attorney General fined Verizon for pretending service with a 5GB monthly cap was unlimited in 2007. It looks like Walmart's wireless service is running over Verizon's national network, so should Walmart decide to carry more sophisticated data-hungry phones, you'll likely see this issue pop up again.
Walmart Steps Into Prepaid Cell Phone Game | NBC Dallas-Fort Worth
10-25-2009, 10:11 PM
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