Mobile industry turns back on pre-pay market

Updated As we predicted on Friday, the decision by One2One to double the price of its pay-as-you-go phones and concentrate instead on contract customers has sparked similar action by other UK mobile companies.

Once One2One said it would increase its pre-pay phones from £40 to £70, the competitive pressure was off. A spokesman for the company also predicted that the market would follow. Presumably, after One2One wasn't deluged with bad press, the others have decided they no longer wanted to subsidise the pre-pay market when they can get more profit and "loyalty" out of the contract phone market.

Orange is reportedly doubling its Just Talk pre-pay pricing, although its spokesman was pretty circumspect with us. No confirm nor deny again. We'll be the first to hear when it officially announces that it is to increase the price of its pre-pay package, apparently.

Vodafone has got in on the act as well. The company pointedly failed to get back to us on Friday. It is doing the same again today although we have learned that it is going exactly the same route as One2One. Vodafone is to cut the "bonus" paid to distributors for signing pre-pay customers - effectively pushing the price for its pre-pay offering up to £70, in line with One2One.

Apparently it will also put an end to its all-in-one offering, which came with a year's contract line rental and monthly minutes.

Are we looking at the end of the pre-pay market? No. But there is a definite shift away from pre-pays. As ever, the industry is moving very quickly (like superfit sheep) and as such none are too keen on talking to journalists at the moment. There's a lot of concern floating round mobile company boards currently, especially considering the nagging problem of 3G phones. The former chief technologist at BT, Peter Cochrane, has raised the possibility of 3G phones never even appearing in a recent interview with the BBC. ®

Update

Vodafone has finally got back to us. Yes, it is effectively pushing the price of pre-pays up by "reducing subsidies". It is also putting an end to the all-in-one service. This, according to the spokeswoman, is not newsworthy and is simply a matter of pre-announced strategy.

Vodafone's new focus is on "customer development not customer acquisition". A circular conversation then evolved, the sum of which is that Vodafone's pre-pay service will be more expensive but no new contract packages or services are to released on the market.

Quite why the mobile companies don't just admit that the price pressure is off pre-pay phones and so they are raising the price to encourage more people to switch to contracts, we don't know.

Related Story

One2One doubles price of pay-as-you-go phones