O2 has announced plans for the launch of giffgaff, which it describes as the first people-powered mobile network, for later this year. The MVNO will operate as an independent company, delivering its service over O2s network.
giffgaff, which O2 says means to give and receive, is a SIM-only network which will reward  users for the contribution they make to everything from answering other users technical queries, to deciding how the network should develop and evolve. It aims to tap into existing online behaviour, where people get involved by creating content, suggesting new ideas or product innovation, and supporting each other with queries on forums or blogs, on behalf of the brands they use.
giffgaff will operate with a low cost base, with no high street stores, handset subsidies and or large call centres. It offers a SIM only tariff and a range of online tools to allow members to self-serve and suggest answers to each others questions in online user groups. Members will also be rewarded for referring giffgaff to a friend or relative, creating user-generated marketing, or voting on business decisions. The more that members get involved, the greater the reward, with the potential to earn back 100% of their top-ups. giffgaff members can choose to use their rebate for mobile calls and texts, take the cash, or donate it to a preferred charity or fundraising group.
The idea came from a mate of mine, one of our O2 brand guys, explains giffgaff CEO, Mike Fairman. 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 Ive 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 says that the people-powered business model has been made possible by the growing trend in online participation, noting that 40% of 16-34 year olds comment on blogs at least monthly, 28% contribute to forums, and 64% of active Internet users have created and managed a social network profile.
We know that people-powered projects like Wikipedia can often out-do the efforts of established businesses and that people trust personal recommendation much more than traditional advertising, so it seemed like a good idea to encourage that behaviour in our members and reward the effort with a rebate, adds Fairman.
giffgaff is a hybrid pre- and post-pay offer, with online top-ups. With pre-pay users forecast to number 42 million in 2010, and with 6 million SIM-only contract users reported in Q1 2009, the company says the marketing opportunity is approximately 48 million people. Pricing will be announced at launch, but will be simple and transparent with low fixed rates for all UK calls and texts to UK mobiles and landlines.
giffgaff goes live later this year with what the company describes as a people-powered marketing challenge which will inspire people to get creative and spread the word about giffgaff”.