The latest salvo from the wireless industry's increasingly aggressive price war threatens the profits and heightens the competition for the carriers who rely on low-end consumers for growth.

The wireless industry was rattled by the recent introduction of a $45 pre-paid flat-rate calling and text-message plan by Tracfone Wireless Inc.'s Straight Talk service. The rate undercuts the former benchmark of $50, which Sprint Nextel Corp.'s (S) Boost introduced early this year.

The move reignited concerns over a stepped-up price war and underscored the growing difficulties in winning over new wireless customers. With most consumers already packing a cellphone, carriers are eyeing each other rather than any pools of untapped customers.

Straight Talk represents a dangerous threat to the other pre-paid players such as Boost, Leap Wireless International Inc. (LEAP), MetroPCS Communications Inc. (PCS) and Virgin Mobile USA Inc. (VM). They've enjoyed success recently because their plans are cheaper, and they don't require a credit check or lengthy service contract.

"We believe that the $45 Straight Talk plan could substantially slow the growth of the unlimited carriers," said Phil Cusick, an analyst for Macquarie Securities.

In addition to Tracfone's Straight Talk, MetroPCS Communications last week launched an unlimited international calling plan as a $5 add-on option. On the wireless-data side, Comcast Corp. (CMCSK) is offering a bundle of cable Internet and wireless WiMax access for $50. The plans follow the introduction of $99 flat-rate plans by the major carriers last year.

"Taken together ... (the new plans) are a not-so-subtle reminder of the inherent instability of the U.S. wireless market today," said Craig Moffett, an analyst at Sanford C. Bernstein.

Tracfone's Straight Talk hurts Boost the most. Sprint's pre-paid service - which rides off of the extra capacity from the Nextel network - saw staggering growth after it unveiled its $50 all-inclusive plan. It's the key growth driver for the No. 3 U.S. carrier, which has been losing valuable contract customers for nearly two years.

In recent trade, Sprint was down 3.7% at $4.44; MetroPCS was off 4.4% to $12.08; Leap fell 4.3% to $29.24; and Virgin Mobile fell 3.5% to $3.61.

The other players were dismissive of the new plan.

"This is much ado about nothing other than a new headline," said Virgin Mobile Chief Executive Dan Schulman.

Boost's plan competes well with Tracfone's Straight Talk, said Boost President Matt Carter. Boost offers a higher selection of phones, is available at more locations and doesn't charge additional fees, he added.

MetroPCS, for its part, believes its plan compares well against Straight Talk. "Our $45 plan has far more value to the consumer than the (Straight Talk) plan," said MetroPCS Chief Operating Officer Tom Keys. "We don't consider the (Straight Talk) plan a truly unlimited plan."

Leap spokesman Gregory Lund said: "For us, it's another competitive issue to deal with."

He noted that there were "extreme differences" like international access.

With so many pre-paid players in the market, there will likely be a renewed call for consolidation. The most commonly talked-about deal is a merger between MetroPCS and Leap.

Given the aggressive pricing, it's unclear how profitable the service is.

"Can Tracfone make money on this? We doubt it," said William Power, an analyst at Robert W. Baird. He estimates that the monthly cost for the service is $40 a month, which leaves little for customer acquisition costs and general expenses.

Tracfone, however, has been known to run an efficient operation. With roughly 12 million customers, it's by far the largest pre-paid provider in the U.S.

A company spokesman wasn't immediately available for comment.

Despite the increased competition, there remains much interest in the pre-paid market, as evidenced by the participation of Verizon Wireless. Tracfone, a unit of America Movil S.A.B. de C.V. (AMX), is using Verizon's network. Verizon Wireless is a joint venture between Verizon Communications Inc. (VZ) and Vodafone Group Plc (VOD).

While the deal is structured as a wholesale agreement, it flies in the face of Verizon's insistence that it remain focused on the post-paid market.

It can be taken as a sign that with growth in the wireless business slowing, the carrier can ill afford to ignore the pre-paid market, Macquarie Securities' Cusick said.

-By Roger Cheng, Dow Jones Newswires; 212-416-2153; roger.cheng@dowjones.com