Recs

4

Is Wal-Mart Your New Cellmate?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

The world's largest retailer wants a chunk of the wireless-carrier game. So on Sunday, Wal-Mart (NYSE: WMT  ) is introducing low-end cell-phone service nationwide.

Powered through America Movil's (AMEX: AMX  ) TracFone Wireless, the prepaid plans start at $30 a month and max out at an industry-awakening $45 a month for unlimited minutes, text messages, and data.

This is naturally going to be a shot to the gut of giants AT&T (NYSE: T  ) , Sprint Nextel (NYSE: S  ) , and Verizon Wireless, who all wield costly usage plans and anchor customers to two-year commitments. However, at least the big boys have exclusivity deals with the hottest smartphone models. Since Wal-Mart's Smart Talk service is not tied to a long-term contract, it's not going to subsidize the fancy smartphones. It's offering three entry-level handsets, and customers have to pay the full $40 to $100 price.

The players quivering now are the cheaper providers. Wal-Mart's gunning for MetroPCS (NYSE: PCS  ) , Leap Wireless' (Nasdaq: LEAP  ) Cricket, and Virgin Mobile (NYSE: VM  ) .

Don't start digging any graves, though. Wal-Mart doesn't always get what it wants: Its forays into DVD rentals, social networking, and digital downloads have been embarrassing flops.

Wireless service may be another fiasco, but I wouldn't bet against Wal-Mart. The discounter attracts the perfect audience to pitch low-end yet full-featured prepaid wireless service. Its presence will keep industry prices in check, and that's where shareholders in all of the wireless carriers need to worry.

Take the Motley Poll

What do you think about Wal-Mart's chances in wireless?

Best Odds in the Universe!
If you're interested in a 98.79% chance at beating the market... and a 70.84% chance at DOUBLING the market's return – Motley Fool Supernova could be just what you're looking for. And get this: We arrived at these odds from 10,000 random back-tested portfolios composed of Motley Fool Co-founder David Gardner's personal stock picks.

It's why David recently handpicked a small team of world-class portfolio managers. You see, he thinks these odds can get even better! And he'd like to prove it to you...

Simply enter your email address. And the answer to the question everybody is asking will be delivered to your inbox!

Sprint Nextel and Wal-Mart Stores are Motley Fool Inside Value selections. America Movil is a Motley Fool Global Gains recommendation. Try any of our Foolish newsletter services free for 30 days. Now that's window shopping!

Longtime Fool contributor Rick Munarriz wonders whether you can buy Straight Talk through an express lane. He owns no shares in any of the companies in this story and is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 15, 2009, at 4:06 PM, Aryabod wrote:

    The growth is in Data and that is not where Walmart is going. I do believe Pre-Paid plans will grow and eventually you will be able to purchase your own phone and choose the carrier of choice. What people don't realize is that these niche players have limited coverage, which will not suffice for most of us, however if you are on a budget, why not. There unlimited plans only work where they have coverage. At least Boost Mobile has nationwide coverage and Push to Talk, which is not available on most of these plans.

    On the Post Paid side the carriers that will get hurt the most are the ones that are gouging the consumer the most, ATT and Verizon. When compared to Sprint they are charging double Sprint's monthly contracted service for relatively the same service. That means a gouging premium of $80/month, which over two years amounts to $1,920. Now I ask you is an iPhone worth an extra $1,920? It might have been even a year ago, but with the current selection of phones from HTC's Hero, Samsung's Moment and the new iteration of Palms, Pre and Pixi, the answer is absolutely not.

    As the consumer becomes privy to these differences and a better selection of phones become available both ATT and Verizon will be compelled to lower their prices. Sprint has less room to lower prices only because they have already done so.

  • Report this Comment On October 28, 2009, at 4:34 AM, HarvyWall wrote:

    You are quite wrong Aryabod, Straight Talk runs on Verizon's network nationwide and the the coverage is not limited, in fact Verizon has better coverage than Boost (Sprint) which is a well known fact and Straight Talk's unlimited is cheaper than Boost's. I bought the unlimited Straight Talk package and the data is also unlimited so I think you really don't know what you are talking about. I am very happy with my new Straight Talk phone, it does everything I need it to do.

  • Report this Comment On October 31, 2009, at 1:51 PM, CheapChica wrote:

    The growth of prepaid is a function of two things: the economy, naturally, and the growing unhappiness of the shenanigans of the postpaid providers.

    To many of us, the best thing about Straight Talk is its simplicity. I am so tired of wading through funky phone bills with mysterious charges and fees.

    I really appreciate the savings, of course, but not having those awful and undecipherable bills has been a great stress-reducer.

  • Report this Comment On December 16, 2009, at 5:11 PM, billroselius wrote:

    Question. Does American movil use either ATT or Verizon's network? Could I get one of the new Google phones and use it on the AMX network?

  • Report this Comment On December 18, 2009, at 6:30 PM, SavingGal wrote:

    I couldn't agree more with CheapChica. StraightTalk is simple and saves tons of money. Just $45 for UNLIMITED texts and calls, plus great coverage with it being on the Verizon network, how perfect! I love this new prepaid plan and highly reccommend it to anyone!

    Also, a little fun fact I researched is that StraightTalk saves you over $500 a year compared to a monthly contract :)

  • Report this Comment On January 12, 2010, at 10:26 PM, kgome005 wrote:

    Walmart is really getting it right with Smart Talk. College bills and after Christmas ones are killing me and the chance to $45 a month with no contract and an unlimited message/call plan - I can't pass that up.

    The coverage on the Verizon network really has my old ATT coverage beat and the selection of phones is pretty awesome - they even have a SmartPhone for a $100 less than the Apple IPhone.

    I really hope the word gets out on this great plan - I love it.

  • Report this Comment On February 03, 2010, at 5:18 AM, TallDavid wrote:

    Wanted to thank everybody who posted about the Straight Talk phones & unlimited text plans. I cannot pass up 45 a month for unlimited either. I have cricket but I'm paying 65 a month so finding something more affordable helps me out more.

    I'm going to Wally World later to browse phones, and get myself set up. Letting my Cricket lapse since I'm definitely getting all of this positive feedback from my research regarding Straight Talk. Many thanks for gaining them a new customer.

Add your comment.

Compare Brokers

Fool Disclosure

DocumentId: 1008517, ~/Articles/ArticleHandler.aspx, 2/13/2012 9:16:24 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 12,874.04 72.81 0.57%
S&P 500 1,351.77 9.13 0.68%
NASD 2,931.39 27.51 0.95%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

2/13/2012 4:00 PM
WMT $61.79 Down -0.11 -0.18%
Wal-Mart Stores CAPS Rating: ****
T $30.04 Up +0.20 +0.67%
AT&T CAPS Rating: ***
VM $5.12 Down +0.00 +0.00%
VIRGIN MOBILE USA CAPS Rating: ***
S $2.31 Up +0.02 +0.87%
Sprint Nextel Corp CAPS Rating: **
LEAP $9.14 Up +0.06 +0.61%
Leap Wireless Inte… CAPS Rating: **
PCS $9.96 Up +0.15 +1.53%
MetroPCS Communica… CAPS Rating: ****

Advertisement