One 2 One claimed the new prices were at least 20 per cent lower than their rivals'. The packages, which start from next month, adjust existing prices to include free call time, an innovation begun by Orange.
The aim is to take a bigger slice of the lucrative small- and medium- sized business market, as One 2 One extends its coverage to South Wales, Scotland, Tyneside and East Anglia. The network raised its coverage from 40 per cent to 80 per cent of the UK last year said it aimed to raise this to 85 per cent at the end of this year.
Jan Peters, One 2 One managing director, denied she was igniting another price war. "We do not see this as a price war at all." But she declined to forecast the impact on the network's projected revenues.
Jim McCafferty, telecommunications analyst with the stockbrokers Hoare Govett, said other operators would respond. "As One 2 One approaches national coverage, other networks may feel they need to reduce their prices to this level. That's what happened with Orange."
One 2 One, which lost pounds 280m last year, said it was on course to break even in 1999.
Ms Peters said its joint owners, Cable & Wireless and US West, were "very committed" to maintaining their stakes in the company.