October 22, 2007

Wal-Mart Pitching HughesNet, Charter Broadband Services

By Carl Weinschenk

This month, Wal-Mart significantly stepped up its status as a broadband service provider by announcing initiatives to sell connectivity from Hughes Network Systems in 2,800 stores and from Charter Communications in more than 700.

The Wal-Mart offer of Charter services - which extends to stores serving 93 percent of Charter's footprint calculated by zip codes - overlaps with the HughesNet (formerly DIRECWAY) satellite-based Internet offering, said Jeff Cox, Charter's vice president of sales channels. Both will be available in the retailer's in-store Connection Center. Cox did not say how many stores in which the two offerings will sit side by side.

The deal is aimed at attracting customers while they are in a buying mood. Sales associates, Cox said, will try to interest customers who are buying PCs, TV sets and other devices in broadband services available at that Connection Center. Whether Charter or another service provider is focused upon by the sales associate depends upon that customer's needs, Cox said.

Cox emphasized the value of having the company's services available when folks are in the stores. "This is at the decision point where they are buying actual devices, be it a television or laptop [or other piece of equipment]," he said. "Now they have the convenience of signing up for connectivity then, instead of post facto."

More retail presence

The Wal-Mart initiative provides a big jump in the retail availability of Charter products and services. The company indicated that it now has a presence in more than 1,000 independent and Charter-owned retail locations. That suggests that there only were about 300 such outlets before the deal with Wal-Mart was struck.

The initiative began at the end of August. Cox said that no numbers have yet been released on the success of the project.

HughesNet, for its part, is offering services as fast as 1.5 Mpbs downstream and 200 kbps upstream (for HughesNet ProPak service) in the Connection Centers and, according to the company, in separate Digital Connection Kiosks in most of the stores. The service is priced at about $60 to $80 per month with a setup fee of about $200 after rebates or at about $80 to about $100 per month with no setup fee. HughesNet claims to have in excess of 350,000 subscribers in more than 26,000 zip codes, said Peter Gulla, HughesNet's vice president of marketing.

Gulla is careful to not position itself as a competitor to the wired industry. "We are not a direct competitor to cable," Gulla said. "That's not our mission, which is to meet the needs of people in areas that cable and DSL don't reach."

Gulla said that the company estimates are that there are 12 million to 15 million people in the United States who fall into this category, including many who don't live in rural areas. The biggest traditional challenge to satellite delivered services - delay caused by the distance signals must travel - is not a problem in this scenario, Gulla said.

Wal-Mart did not provide an executive to comment for this story.

- Carl Weinschenk