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Wal-Mart plans to begin reselling satellite based broadband from Hughes Communications.

Wal-Mart Gets Into The Broadband Business

The market for satellite broadband is small, the service is usually more expensive and is available in mostly rural areas. Less than 500,000 Americans subscribe to satellite broadband, according to Parks Associates. "It's still mainly for people who don't have a choice," Michael Cai, an analyst at Parks told BusinessWeek.

Wal-Mart will offer satellite broadband in 800 stores and pricing will start at $60 a month for 700Kbps download speeds up 2.0Mbps. The company is also rumored to be testing a service similar to Best Buy's Geek Squad.

Wal-Mart may be able to attract some of the less technically inclined users with its broadband service. "They'd have a stronger affiliation to the retailer's brand than the technology service provider brand," says Jonathan Coham, an analyst at consultancy Ovum. "They are more inclined to go with a brand they've grown up with."

Over at Telecompetitor they point out the downside to satellite broadband and how Wal-Mart's move to sell the service will affect competitors. "Satellite broadband has some distinct limitations and tends to be higher priced. It doesn't match up well against cable modem and DSL, either in performance or price. I don't think this announcement will have all competitors 'shaking in their boots.' But any time Wal-Mart makes a move, its worth observing."