Trains, planes and mobile phones: Branson gets connected

Virgin Group has launched a mobile phone that although aimed at the 18-35 market could be particularly attractive to small and medium-sized businesses with a tariff structure offering savings for heavy day-time users.

Virgin Mobile is a joint venture with the UK's smallest operator One2One - combining Virgin branding and distribution outlets with One2One's network. There are no charges for line rental or connection. There are also no peak or off-peak call rates. Instead, customers are charged 15p per minute (ppm) for the first 10 minutes of use, 10ppm for the next 10 minutes and another drop to 5ppm thereafter.

However, these rates are less attractive when compared with rival operators' weekend or off-peak rates. In addition, rival operators claim the deal doesn't simplify the market as Virgin had suggested in the pre-launch hype.

A spokesman for the UK telco's largest mobile operator, Vodafone, said: "Even for businesses it doesn't offer such great savings - a lot of SMEs are already on multiple tariffs with free calls. Also, Virgin doesn't offer group tariffs like Vodafone and Orange."

BT Cellnet added: "Customers don't look at price alone - One2One is known for having poor network quality and no value added services. This is going to provide extra competition but it is not going to make us change our plans for the future."

But Virgin boss, Richard Branson, is confident the venture will attract one million customers within 15 months. Virgin mobiles will be on sale from all Virgin outlets, bypassing resellers, such as The Carphone Warehouse.

Branson has also confirmed that Virgin Mobile will bid for a third-generation UMTS mobile licence.