Paying more to go with One2One

Half of UK children own mobiles; many pay-as-you-go

The UK mobile phone operator One2One has said that the price of its cheapest pay-as-you-go handset is to nearly double in price - from £40 to £70 from May.

Mobile operators have been heavily subsidising pre-pay products, creating a widespread underestimation of their value

Harris Jones, One2One managing director

The company, owned by under pressure German telecoms giant Deutsche Telekom, said it wanted to reduce "unsustainable" subsidies and to persuade more of its users to take out monthly contracts.

At present, the company said, 30% of its customers are on contracts.

It wants this figure to rise to at least 50%. Customers on contracts are more lucrative for mobile phone companies.

"Since One2One launched the first digital pre-pay service in 1997, mobile operators have been heavily subsidising pre-pay products, creating a widespread underestimation of their value," said One2One Managing Director Harris Jones.

Pay-as-you-go mobiles are particularly popular amongst teenagers (and their parents), because users buy a card to pay for their calls, which stops them running up huge bills.

A recent Gallup survey revealed that nearly 50% of all children in the UK aged between seven and 16 now own mobile phones.

The fastest area of growth for mobile phone firms in recent years has been in pay-as-you-go services.

Their launch sparked a rapid rise in the take-up of mobile phones in the UK, with more than half of all adults now estimated to own one.