A MOBILE phone company last night confounded long-expected fears of a downturn in the industry by revealing it is to recruit a further 500 staff across the North-East.

Orange, which employs 5,000 call centre staff in County Durham and Tyneside, has embarked on its first major recruitment drive in over a year.

The news comes in the face of widely reported fears that the bubble was about to burst in an industry which has become key to the region's economy.

The company is to recruit 500 staff for its call centres at Darlington, Peterlee and North Tyneside. Although some of the recruits will replace existing staff, the bulk will be new jobs.

A surge in the number of calls to the company, the region's biggest mobile phone call centre employer, has resulted in it taking on more staff across the country to cope with demand.

The announcement could signal an end to concern that the North-East call centre industry is on the decline.

Last year, 1,200 workers at the One2One call centre in Sunderland faced redundancy after bosses admitted it had begun a business review that could lead to job cuts.

In October, Vodafone axed 650 jobs in the UK as part of its response to the changes in the mobile phone industry.

Fears have been growing for some time that the stagnation of the UK mobile phone market could call a halt to the continued development of call centres.

Nearly three quarters of the population now own a mobile phone, leading to a slowdown in new customers.

But Telecoms analysts are predicting a turnaround in the market largely thanks to phone operators linking up to the new third generation network.

It is believed that another boom in the industry could take place over the next two years as the main mobile phone operators recruit more staff to deal with an influx of customers eager to sign up to new "3G" handsets.

Last night, a spokeswoman for Orange confirmed the company had begun its first recruitment drive in the North-East for some time.

She said: "We are recruiting approximately 500 staff across the three call centres in the region for new and existing roles within the centres.

"They are to be employed mainly as frontline staff, in customer service positions.

"One of the reasons that Orange is recruiting is because of the increasing number of calls to customer service."

The company has also signalled that it may need to employ more staff in the three regional call centres when the third generation network is launched.

The spokeswoman said: "I am sure that at some point in the future there may well be a need for more customer service representatives when '3G' is launched but that is a bit way off yet."

Telecoms expert John Clarke, of Brewin Dolphin analysts in London, believes that a future boom in the industry is only possible if mobile phone operators deliver what they promise.

He said: "Orange will be looking to recruit for the third generation network and hoping that they will be able to generate lots of data revenue.

"This will require a different marketing strategy. They will be looking to recruit people to do two things - to market themselves as distributors of content and information and, on the technical side, to maintain the third generation network.

"The number of people owning a mobile phone trebled between 1998 and 2001. People expected the boom to go on and on.

"There has been a drop in the mobile phone industry generally. It is much more complicated to set up data services and this has caused a delay of a couple of years, causing a slowdown.

"There will not be a boom because of these phones initially.

"They are not expected to go mass market for another couple of years, which will signal a change in the industry, but this will depend on whether operators deliver what people want.