UPDATE: Wal-Mart Expands Cheap No-Contract Wireless Offering

Wal-Mart Stores Inc. (WMT) said Wednesday that it would expand nationally Tracfone Wireless Inc.'s ultra-cheap Straight Talk cellphone service, in another illustration of the ratcheting down of pricing at the low end of the wireless industry.

Straight Talk, which offers a monthly plan for as low as $30 a month, and an unlimited access plan - including text messages and mobile Web access - for $45 a month, was until recently offered as a limited trial service by Tracfone, which is a unit of America Movil S.A.B. de C.V. (AMX). The service is seen as a potent competitor in the hot prepaid segment, particularly because it runs on the Verizon Wireless network. With a national stage, Straight Talk is able to apply pressure on all of the prepaid wireless providers.

Straight Talk will be available nationally starting Sunday.

"It's just one other salvo in the ongoing pricing battle," said Roger Entner, an analyst at Nielsen Co.

The service is seen as a threat to prepaid providers MetroPCS Communications Inc. (PCS) and Leap Wireless International Inc. (LEAP), best known for their unlimited prepaid plans. The two companies are experiencing pressure from Sprint Nextel Corp.'s (S) Boost Mobile, which also vulnerable to the Straight Talk plan.

Spokesmen for each provider weren't immediately available for comment.

MetroPCS shares recently fell 4.2% to $7.22, while Leap fell 4.9% to $14.65.

Lesser known is the effect on larger carriers. Sprint and Deutsche Telekom AG's (DT) T-Mobile USA have already suffered from customers migrating to cheaper plans, but there hasn't been as much of an effect on the top two players, Verizon Wireless and AT&T Inc. (T). Verizon Wireless, owned by Verizon Communications Inc. (VZ) and Vodafone Group Plc (VOD), has maintained its premium pricing thanks to positive perceptions of its network, while AT&T has the Apple Inc. (AAPL) iPhone.

But in the case of Straight Talk, Verizon Wireless provides the underlying network, prompting some concern over its core service. AT&T also has a deal with Tracfone, but doesn't lend its name to the service. The Verizon Wireless name is currently found on Straight Talk products.

"It certainly cannibalizes Verizon Wireless's own business," Entner said. "But Verizon really wants to take a bite out of AT&T's Tracfone business, and they put their name in to up the ante."

Verizon Wireless wasn't immediately available for comment.

Industry observers are already speculating on a response. T-Mobile USA is seen as the next to cut its price with a possible $50 unlimited wireless plan, although the carrier has declined to comment on its plans.

Wal-Mart's move further into wireless is the latest example of the world's largest retailer bringing its size and scale to a business beyond the traditional department store. For example, Wal-Mart has increased its presence in health care for years, most notably by launching a program pricing one-month supplies of certain generic drugs at $4, an action that prompted other drug-store chains to offer similar plans.

Wal-Mart is one of several large chain stores shifting its focus to take advantage of the still growing wireless business. Over the past few months, Best Buy Co. Inc. (BBY) and RadioShack Corp. (RSH) have made a more concerted effort to emphasize the breadth of their wireless options. Best Buy, for example, recently began offering Leap's service in its mobile stores.

While the $45 plan offers unlimited access to everything, the $30 plan includes 1,000 minutes, 1,000 text messages and 30 megabytes of mobile Web access.

Handsets for the plans, from manufacturers including LG Corp. (003550.SE) and Samsung Electronics Co. (SSNHY, 005930.SE), are available at Wal-Mart stores and start at about $40.

The retailer's cellphone pilot program that began last summer in 234 stores was successful, said Wal-Mart, and the company has worked quickly to make the plans available before the holidays.

-By Roger Cheng, Dow Jones Newswires; 212-416-2153; [e-mail]

(Nathan Becker contributed to this article.)