Really Rocket Science

Here’s some big news from the world of direct-to-consumer satellite broadband marketing:

Hughes Network Systems, LLC (HUGHES) today announced that consumers across North America will be able to purchase HughesNet^®, the leading satellite broadband Internet access service, from Wal-Mart, giving customers in rural areas the opportunity to experience the benefits of high-speed Internet access. The HughesNet service will be sold in 2,800 Wal-Mart stores across the U.S., including locations throughout most of rural America where terrestrial broadband services, such as cable and DSL, are often not available.

With HughesNet, consumers in any region in the continental U.S. need only a view of the southern sky to have access to high-speed Internet. And with millions of Americans shopping at Wal-Mart each week, being able to purchase HughesNet at the stores makes broadband more accessible in many more areas across the country than ever before.

BusinessWeek looks at the implications: 

[T]he 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.

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. 

Broadband Reports says Walmart is "working on a tech support service akin to Best Buy’s Geek Squad," in order to support the new offerings as well as to combat the high return rates that tend to accompany the sale of new technology to consumers who still haven’t figured out how to program their VCR DVD.

This entry was posted on Wednesday, October 10th, 2007 at 9:50 am and is filed under Observation, Rockets & Launches. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.