3G mobile phone operators in the UK are facing additional competition from Tesco Mobile . Orange. O2, 3, Vodafone, T-Mobile and Virgin Mobile are now faced with Tesco Mobile competing for the monthly contract upgrade market.

Tesco Mobile , which is an MVNO with O2, began selling low level prepay mobile phones, then included the more expensive prepay mobile phones and then smartphones. Recently, Tesco Mobile launched news that it will sell the iPhone 4 and others on a 12 month contract. This is in addition to 18 month and 24 month contracts.

Tesco Mobile has over 2 Million customers but only 100K have a monthly contract, the other 1.9 million have a pay as you go handset.

This news comes from Mobile Today who interviewed Tesco Telecoms' COO David Taylor and he confirmed that monthly customers of Orange. O2, 3, Vodafone, T-Mobile and Virgin Mobile will be able to update via Tesco Mobile. This will be launched within 2 weeks. Tesco Club card points will be provided to people who upgrade to Tesco Mobile .