T-Mobile to cut the cost of a phone call home

T-Mobile will today announce it is to slash the call charges paid by customers who use their phones while abroad. The mobile phone network operator is to move to charging a single rate of 55p a minute for customers using their phones in 29 European countries, as well as in the US and Canada.

The switch to a single charge represents price cuts of up to 45 and 54 per cent respectively for customers using T-Mobile phones while in Europe or North America. The price will apply whichever local mobile phone network customers' handsets "roam" on to - and whether they are making or receiving calls.

The move comes amid increasing concern about the cost of roaming charges paid by mobile phone customers while they are overseas. Earlier this year, the European Commission said it believed mobile phone customers were being charged 60 per cent too much by network operators who were breaching free trade laws with high roaming fees.

However, Jim Hyde, managing director of T-Mobile in the UK, said the company was not attempting to head off regulatory action.

T-Mobile's move is the latest challenge in an increasingly cut-throat battle for market share among mobile phone companies. A campaign to publicise the initiative will have to compete with a new advertising drive from rival O2, which is spending £10m on sharpening up its image.

O2, Britain's largest mobile phone network, with 16 million customers, centres on a new television commercial in which 3D bubbles zip through the air. The bubbles fly between football grounds, buses and buildings animated to look like piano keys. The company that produced the computer animation, which is blended with real footage, also worked on the film Gladiator.

Russ Shaw, O2's UK marketing director, said that after the main 50-second commercial has been aired, shorter versions would offer O2 subscribers free music video downloads and street map downloads. O2 will also offer free calls and recharging facilities from O2-branded taxis around London.

The company is hoping for more success than its rival Orange. The France Telecom-owned operator axed a £10m marketing drive campaign last month just weeks after its launch.

Orange's ads suggested that mobile phone consumers shared characteristics with animals including canaries, and less obviously, racoons, dolphins and panthers. The idea proved disastrous and was dropped only a month later. The creative agency Mother has been replaced with units of Publicis and Havas picking up the £300m pan-European account.