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.
