O2's new MVNO unit relies on 'people power'
Published: 29 September, 2009
There is a new wave of MVNOs appearing across Europe, but the UK's 'giffgaff' is using a new approach. The virtual operator claims to be "people powered", tapping into the crazes for social networking and user generated content.
Giffgaff (which means 'mutual giving'), is far closer to its network carrier than most MVNOs, which merely lease capacity - it is actually an autonomous unit within O2 UK, founded and run by a group of O2 executives including CEO Mike Fairman. It will rely on O2 for the network and back end services such as billing, but its customers will provide many other functions themselves on a community basis - answering technical problems, for instance (presumably to reduce customer service costs) and deciding how the operation evolves and what services it offers in future.
The MVNO's web site says it will be commercially available before Christmas and will offer a single flat tariff for voice, text and 3G data. It also keeps its costs low by remaining online only, with no longer term contracts, and the operator will only provide a SIM card, not a phone or other device.
As well as leaping onto trends already seen in other areas of the fixed internet, for self-service web apps, and interaction between users within a community, the new operator is borrowing some ideas from another MVNO that launched in the UK, Blyk (which recently pulled back from the virtual cellco model and became a sub-brand for Orange). For instance, giffgaff is talking about attracting and rewarding customers depending how much involvement they have and how much they contribute - although mainly ad-based, Blyk discussed this concept and it has also been used in the Wi-Fi world, notably by FON.
The giffgaff site says customers could "get back up to 100% of your top-ups... You can keep the cash, pool it amongst other members, or donate it to charity - so you can yik, yak and give back."
The move by O2 shows how the cellcos are seeking to diversify their business models, as they come under huge competitive pressure, but without damaging their core brands and propositions. Blyk's new incarnation as a partner of Orange, allowing that cellco to explore the ad-supported model, is one example. 3 UK is also adopting some tactics that involve leveraging its own customers to increase its business and/or reduce its overheads. It says it will use its subscribers as agents to attract new users, offering cashback rewards to people who successfully promote its prepaid service to family and friends in a scheme known as '3 free agent'.
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