Is Wal-Mart Your New Cellmate?

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.

© 2009 UCLICK L.L.C.