giffgaff is a new UK phone company that has branded itself as the first “People Powered” mobile phone network. The company aims to stand out by operating at a low cost base, without the overheads of high street stores, handset subsidies and the running of large call centres. In doing so, the company wants to pass on these reduced costs to you, the consumer.
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How? With your time and help.
The company want you to spread the word, introduce new customers, suggest new products/services and provide technical support to its members via its support forums (something the company feels you are already doing on various websites). Based on the amount support you give, the company will, in return, reward you with a rebate up to your entire mobile phone bill. The rebate can be taken in cash, converted into minutes/text messages or even given to charity.
On how the concept came to fruition CEO, Mike Fairman says:
“The idea came from a mate of mine, one of our O2 brand guys. He was very excited about the possibilities of a potential new business model, and he thought it would be great to apply the principles of web culture to a mobile network operation. As I’ve run online businesses at O2 for a number of years, we took the idea to the O2 board who loved it and decided it was strong enough to become a company in its own right.”
The company is an MVNO (Mobile Virtual Network Operator) powered and owned by O2, the UK’s second largest mobile phone network (once Orange and T-Mobile officially merge). This means GiffGaff will have identical network coverage as its parent company.
The company’s entire business model is dependent on whether its customers will be willing to devote enough of their time to introducing new customers and providing support to other members of the network. Since the company only provides its customers with a sim card and network access – no mobile phones – there should be limited network support issues. However, as GiffGaff’s sim card will work on any unlocked handset, the company expects various handset issues to arise and hope the community will help each other out.
Additionally, similar to how Twitter created a community of application via its API, GiffGaff also plans to offer an API that will enable developers to potentially offer unique applications and interpretations of customers mobile phone.
It’s all very innovative, no question. Whether it will see success, time will tell, but with O2 backing it, GiffGaff can afford to make a few mistakes before finding a “people powered model” that works. I look forward to seeing how this develops.