Wal-Mart's Latest Sale: Broadband

[EV_Ares]

((I wonder if this is why Comcast has started to offer discounts if you sign up for a 2 yr contract)).


The retail giant's ISP turn is likely to push down prices and squeeze out competition. Will other big-box stores follow suit?
Broadband sellers, beware. A new provider is on the scene—and it's a known price cutter. Wal-Mart Stores (WMT) plans to announce Oct. 9 that it will resell high-speed Internet access from Hughes Communications (HUGH), the world's largest provider of broadband services via satellite.

Granted, the market for satellite broadband is small, given the widespread availability of digital subscriber line access from phone companies and cable modem services from cable operators. Currently, satellite service tends to be more expensive and it's available mainly in hard-to-reach rural areas. Fewer than 500,000 Americans subscribe to satellite broadband access, according to consultancy Parks Associates. "It's still mainly for people who don't have a choice," says Michael Cai, an analyst at Parks. Only about 10% of Americans have no access to DSL or cable broadband.

Emphasis on Services
But Wal-Mart, which will provide satellite broadband in 800 stores, could make the service more appealing—and give existing providers cause for concern. Whenever Wal-Mart enters a new market, it tends to push down prices and squeeze out competition. Consider what happened when Wal-Mart began offering sub-$1,000 flat-panel TVs. After trying to match these prices, rival Circuit City (CC) had to close 70 stores (BusinessWeek.com, 4/23/07) and lay off 3,400 employees earlier this year. CompUSA had to shutter more than half of its stores.

Wal-Mart could have a similar impact on sellers of broadband services, especially if the Hughes deal presages a bigger push into services related to high-speed Internet access. Retailers are stepping up their emphasis on services, partly in response to Wal-Mart's penchant for bargain-basement prices. To keep pace, Wal-Mart may need more than simply lower prices.

Extra services can also be a way to combat high return rates. During last year's holiday season, "a lot of (Wal-Mart) consumers got their high-definition TVs home and didn't know how to set them up, and there were high return rates," says Nick McCoy, senior consultant at researcher TNS Retail Forward. Not so in cases of rivals, such as Best Buy (BBY), which dispatches its Geek Squad technicians to help set up newly purchased gear. And services can drive PC sales, too. In its first fiscal quarter ended in May, Best Buy reported "a strong double-digit increase in computer-services revenue," according to the company's filings.

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http://www.businessweek.com/technology/content/oct2007/tc2007108_060026.htm?chan=top+news_top+news+index_top+story

[MadHound]

1. Now there's a corporate match made in hell

Wal-Mart and Rupert Murdoch(owner of Hughes). I wonder who's going to cut the other's throat first.

[Tandalayo_Scheisskopf]

2. While BB satellite is a godsend for rural people...

Where there are no other BB options, technically, it leaves a lot to be desired. High latencies(think: lag) and severe usage caps. Also, the cheaper usage tiers are pretty thin on speed.

If there is no other broadband service where you live, this is a very viable alternative. If there are other alternatives, then go for them.

[TheWraith]

3. I used to be a curtomer of theirs until I got DSL.

"A lot to be desired" is generous. Truth is that it sucks rather badly, and is ONLY acceptable in comparison to dialup. Even then, I spent nearly every minute online plotting about how I could get ANY other connection.