Wal-Mart to offer branded mobile service: No-contract offering to use T-Mobile USA's network

UPDATED: Wal-Mart Stores Inc. (WMT) is set to further its wireless ambitions next week with the launch of a branded mobile offering that will run on T-Mobile USA Inc.’s (DTEGY) nationwide network.
The plan, dubbed Walmart Family Mobile, will offer unlimited voice calls and text messages for $45 per month without a contact. Customers can add additional lines for $25 per month that also includes unlimited voice and text messaging service.
The Walmart Family Mobile service will also include 100 megabytes of data transmission for each line of service per month with additional WebPak refill cards available for purchase.
The new plans appear to be direct competitors for Tracfone Wireless Inc.’s (AMX) Straight Talk offering that is currently available exclusively through Walmart locations. That service runs $45 per month for unlimited voice calls, text messages, data access and 411 calls using Verizon Wireless’ (VZ) nationwide network. Tracfone recently reported that it would begin including access to AT&T Mobility’s (T) GSM-based network to the service.
Wal-Mart said devices for the service would initially include Motorola Inc.’s CliqXT smart phone that is powered by Google Inc.’s Android operating system, Samsung Electronics Co. Ltd.’s Highlight touchscreen device, Samsung’s Column with a slide-out QWERTY keyboard, Samsung’s T139 flip phone and Nokia Corp.’s 1661 candybar phone.
Pricing for the devices was not released, though T-Mobile USA sells the CliqXT without a contract for $330, the Samsung Highlight for $280, the T139 for $30 with a $25 refill card, and the Nokia 1661 for $20 with a $30 credit to a talk and text plan.
Each device is eligible for the $45/$25 rate plans, a deviation from competing no-contract offers from the likes of MetroPCS Communications Inc. and Leap Wireless International Inc., which charge a premium for smart phone users though they do offer unlimited data and e-mail access for the premium price.
While the $45 price point simply matches other offers being sold through Wal-Mart locations, analysts note the ability for customers to add additional lines at a significant discount could prove compelling for the retail giant’s demographic.
“The Wal-Mart offer does look competitive as another unlimited postpaid plan without a contract,” noted Current Analysis Inc.’s principal analysts of consumer services Weston Henderek. “However, the big trump card here is the ability to add additional lines for a greatly reduced rate ($25). Plans from Straight Talk and regional providers like Cricket force you to pay full price for each additional unlimited calling line.”
The move to use T-Mobile USA’s network should give Wal-Mart an inside line on offering lower-priced devices as the carrier’s GSM-based network opens up the possibility to tapping into an extensive, international technology standard.
For T-Mobile USA the move could be a compelling way for the carrier to reverse recent customer defections. The carrier has aggressively courted the prepaid market with recent rate plan changes that helped the carrier add more than 41,000 no-contract customers during the first quarter of this year, but seemed to fade as it lost 199,000 prepaid customers during the second quarter.
Wal-Mart has already shown with the Straight Talk offering that its distribution might when coupled with a compelling price point can lead to strong wireless uptake. Since its launch last summer the Straight Talk offering has bolstered Verizon Wireless’ wholesale customer growth – including nearly 900,000 wholesale net customer additions during the second quarter – and caused ripples through the prepaid market.
The new offering also increases competition within Wal-Mart’s retail locations. The company currently offers postpaid services from the nation’s four nationwide operators as well as Alltel Wireless; prepaid devices and services from AT&T Mobility’s GoPhone; Sprint Nextel Corp.’s Common Cents and Virgin Mobile brands; Tracfone’s Straight Talk, Net10 and its branded offering; Verizon Wireless’ branded offering; T-Mobile USA’s branded offering; and top-up cards for AT&T Mobility’s GoPhone, Sprint Nextel’s Common Cents, Alltel Wireless, Tracfone’s Straight Talk and Net10.