O2's people-powered giffgaff unleashed

The UK has largely escaped the widespread Western European phenomenon of multiple-branded mobile offerings from network operators. In markets such as Belgium there are numerous wholly-owned and operated brands by the three mobile network operators (Base, Mobistar and Proximus) for consumers to choose from – over 20 brands were being marketed at the last count. However, the launch of Scottish-themed prepaid mobile offering giffgaff this week heralds the initial arrival of this phenomenon in the UK retail market. giffgaff has been widely referred to as a new MVNO but it is actually owned and operated by the UK’s largest mobile network operator O2 – therefore making it an O2 brand. giffgaff has done little to challenge the MVNO moniker being attached to it. No doubt it's hoping to benefit from the perception of it being the little guy taking on the might of the big operators.

giffgaff states that its name is Scottish for ‘mutual giving’ and claims to be a ‘people-powered’ mobile network as it will involve its customers in the way it is run. Customers, or ‘members’ as giffgaff calls them, will be rewarded with points whenever they get someone else to join, help another member with their giffgaff queries or help the giffgaff marketing team promote the service. The points are convertible to cash, mobile credit or a charity donation twice a year.

So far the offering appears rather gimmicky, with initial marketing efforts focussed on a range of novelty items (or ‘tools’ as giffgaff calls them) that members are encouraged to ‘hire’ and film themselves with before posting the results online; just who would want to be filmed collecting dog poo or with a bondage-suited 'gimp' remains unclear! The management team at giffgaff, led by ‘gaffer’ Mike Fairman, have equally entertaining job titles that would place them at the head of the queue to be deemed surplus to requirements when cost-cutting is being considered at 'traditional' mobile operators, including a ‘Chief of Member Experience’, a ‘Proposition and Product Theorist’ and a ‘Digital Guru’. Which one of them drew the short straw to be the gimp is not yet known.

Despite the initial novelty value, the primary attraction to customers will be the potential to reduce their mobile phone charges. giffgaff has announced that calls to UK mobiles and landlines will cost GBP0.08 per minute and texts will be GBP0.04 each. Calls between giffgaff members will be free for up to 60 minutes per call and web browsing will be also free at launch for up to six months. giffgaff claims it will listen to user suggestions on pricing when it introduces data charges next year. Call me a cynic, but I can’t see many members suggesting that they start charging for something they started off giving away for free!

giffgaff may be Scottish for ‘mutual giving’ but the only thing being given at the moment to industry watchers (especially those who recall former user-community mobile offerings like the ill fated, ad-funded blyk) is a healthy dose of scepticism. Gimmickry will only get giffgaff so far; the real test will be if it can deliver a proposition that customers are looking for. Until then, one thing that appears unlikely to disappear anytime soon is the rise of operator-owned branded offerings.