Mobile data at a discount: Walmart's MVNO

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[CORRECTION: We reported Walmart Family Mobile as an MVNO on the T-Mobile network, but Walmart contacted us to say that isn’t the case. Traditionally an MVNO is a carrier in all ways except for the network, access to which it leases from a network operator. In the case of Walmart and T-Mobile, their relationship is one of partners rather than one of a retailer and wholesaler. According to Walmart spokesman Ravi Jariwala:

T-Mobile is the service provider and is responsible for customer service, billing, and of course, operating the wireless network. As with other national carrier plans, Walmart facilitates the sales and marketing of the Walmart Family Mobile service, but we do not buy airtime from T-Mobile or operate in any capacity as an MVNO.

That explains the “powered by T-Mobile” tacked to the end of Walmart’s Family Mobile branding. Effectively T-Mobile is running an alternate business model for wireless voice and data under a different name, which many operators do—take Sprint’s Boost Mobile and Virgin Mobile for instance. This one just happens to be in partnership with Walmart. ]

While the rest of the mobile industry is scaling the smartphone upward, embracing video communications, streaming and other bandwidth services, Walmart (NYSE:WMT) is scaling downward, offering smartphone plans geared at the typical American consumer who shops at its stores.
Through its mobile virtual network operator agreement with T-Mobile (NYSE:DT), Walmart is launching a no-contract, family-oriented postpaid mobile service, but unlike other budget services, which tend to focus on voice, Walmart is bundling data services in with every plan and will even offer up Android smartphones.

Most interesting, though, is how Walmart Family Mobile will charge for data. Rather than take the all-you-can-eat subscription model of the most high-end plans or even the usage-based data tiers AT&T recently launched, Walmart is offering the closest thing to metered data plans the industry has seen. Every unlimited talk line ($45 a month for the first number, $25 for every additional line) will come with a 100 MB bundle, at activation, but from that point on customers purchase data as they go, buying 200 MB blocks for $10 each, with a discounts kicking in if customers buy bigger blocks. The data bundles are shared among all phones on a family plan, but the most radical aspect of the service is that megabytes never expire. Unused data carries over from month to month — that’s what you called metered data.

Of course, a hard-core mobile data users will find much better deals with another operator. Any usage over 500 MB a month by an individual user would make an unlimited plan from Verizon Wireless (NYSE:VZ, NYSE:VOD), Sprint (NYSE:S) or T-Mobile more cost effective. But the service already undercuts AT&T’s (NYSE:T) 200 MB for a $15 monthly plan, meaning Walmart may just be setting the new bar for usage-based mobile data services.

For the more casual data user the savings could be stunning. As Liane Cassavoy points out at PC World, a customer can buy in bulk and spread their usage out over the year or among their family’s phones. You could pay $40 for 1 GB and consume 200 MB each month for the next five months without paying a penny more. That’s only 30 MB a month less than what the typical high-end feature phone/smartphone user consumes anyway, according to wireless analyst Chetan Sharma.
Of course, Walmart doesn’t have the Apple (NASDAQ:AAPL) iPhone, and the Android phones it will offer (the only smartphone advertised so far on Walmart’s Web site is the Moto CLIQ XT) won’t be as cutting edge as the new Motorola (NYSE:MOT) and HTC Droids and Samsung Galaxy phones, but then again Walmart probably doesn’t want to. As a no-contract service provider, Walmart won’t be subsidizing these phones. Because this service is targeted at a more budget-conscious family demographic (Walmart claims that a family of three would save $1200 over the comparable unlimited talk-and-text multi-year contract plans offered by Verizon or AT&T), $500-plus phones are probably well out of the acceptable price range.

One final note: Walmart is doing something funky with international calling. Though it was short on details in its announcement, it revealed it would offer discount international long-distance rates to select countries for users with a WebPak. That leads me to believe that Walmart is offering some kind of voice-over-IP (VoIP) calling service over the data channel. Whether they’re just welcoming Skype into the fold or launching a white-label VoIP service remains to be seen — if VoIP proves to be the case at all. Hopefully Walmart will release more details soon.