Vodafone today became the second of Britain's four mobile operators to say the era of heavily subsidised phones was over.
It said it was cutting the subsidies it pays to third-party distributors of its pay-as-you-go telephone packages from May 1st, with the expected result that the cheapest no-contract phone package will rise to £70 sterling from about £40 today.
Vodafone said it was part of its plan to focus on customer retention and development rather than customer acquisition.
Last week rival operator One2One sparked off the price rise, saying it was almost doubling the price of its cheapest pay-as-you-go handset to £70.
Contract users, who pay a monthly rental, have a billing relationship with the operator that could in time be developed into a money-spinner if people pay for a whole range of online and offline goods via their phone bills, as operators hope.
Pay-as-you-go customers buy top-up cards from shops to pay for calls and have no billing relation with the phone company.
Many telecommunications companies are heavily in debt after paying out for licences for coming third generation phone networks that will offer always-on, fast Internet access.
Mobile phone use has soared in Britain since the start of the pre-pay system. Up to two thirds of Britain's 60 million people have mobile phones now.