Mobile phones in new price war

A mobile phone price war was triggered today with the launch of a new "no-frills" service.

Cut-price operator easyMobile will offer what it claims to be the cheapest calls in Britain with a flat, round-the-clock rate of 9p a minute for UK calls and 3p for a text message. There will be no monthly subscription fee.

The company, which is licensing the "easy" name from from easyJet founder Stelios Haji-Ioannou, hopes to draw millions of users away from the dominant high street brands such as Vodafone and Orange.

It says its rates, initially to be tested for three months, will undercut current typical prices of 10p to 30p during peak hours and 5p to 25p during off-peak. Text prices average around 10p.

It also claims its simple single rate will appeal to users baffled by the myriad of different tariffs marketed by the "big four" network providers. The launch is expected to be answered with an immediate response from rivals such as Carphone-Warehouse's Fresh mobile brand, which charges 15p a minute for calls and 5p for texts.

Fresh, which has 120,000 customers, is likely to drop its rates to below the easyMobile tariffs, according to industry sources.

Another service, Virgin Mobile, which has four million customers, is also said to be ready to drop its prices. The launch of easyMobile is said to be causing concern at Vodafone, 02, Orange and T-Mobile because its simplicity could persuade-more people to switch. A recent Which? survey suggested that billions of pounds are being wasted by subscribers using unsuitable tariffs.

Easymobile is able to keep its prices low by "piggy-backing" its calls on the T-Mobile UK network and keeping customer services to a minimum.

It will have no shops and customers will simply be sent a Sim card through the post to insert into their handsets. The easyMobile Sim cards can only be ordered over the internet using a credit card.

"You don't get any effective customer service, just as you have to pay for the sandwiches on a no-frills airline," said a commentator.

The easyMobile service is operated by Danish company TDC. It has already launched similar products in Scandinavian countries, where call rates have been sent crashing.

Vodafone, the world's largest mobile phone company, has said it will also consider launching lowcost "sub brands" to woo cost-conscious customers but added that it has no current plans to do so.