It's been a year since Wikipedia founder Jimmy Wales joined The People’s Operator, a mobile network that allows customers to donate 10 per cent of their bill to charity. He sat down with The Drum's Jen Faull at Mobile World Congress to discuss how it plans to shake up the telco market without spending a penny on ATL.
You could be forgiven for not knowing what The People’s Operator (TPO) is. The mobile network quietly launched in 2012, claiming an industry first with a business model that not only lets customers automatically donate 10 per cent of their phone bill to a cause of their choice, but as a whole commits 25 per cent of its profits to charity.
Despite backing from internet entrepreneur and Wikipedia founder Jimmy Wales, and a £100m flotation on the London Stock Exchange, it remains a widely unknown player in the telco sector.
The brand is now on a mission to get more people on board in 2015, but it will not be venturing down the costly above-the-line avenue. Indeed, only by eschewing traditional marketing can the model remain viable.
Instead it will look to grow awareness virally with the imminent launch of a social network akin to Facebook, which will allow anyone to use it to update people about the charities they support through TPO with pictures and videos, raise money, chat, and, crucially, invite others to join.
Wales – who was initially involved with the company in an advisory capacity as co-chair – tells The Drum the concept has drawn him deeper into the business than he first anticipated. He now serves full time as executive director of strategy and digital community.
“I’m personally designing the social networking platform to let people recruit to their causes, and that’s fun. It’s been a long time since I’ve been actively involved in development and design,” he says.
It seems no one is in a better position to help TPO woo more customers than Wales. His last project, which set out to establish a group of engaged, loyal and dedicated users, grew to become one of the largest and most frequently visited websites in the world, with a community of thousands who update and edit its pages regularly. And while other websites of Wikipedia’s size have succumbed to the lucrative prospect of monetising audiences through paywalls and advertising, Wales’ venture remains open and ad-free.
“Wikipedia was an idea that spread because people liked to talk about it and communities of people can accomplish great things. When you get people together with an idea that matters to them they can go out and do something about it. That’s something that the internet should be about more often,” he says.
He wants the TPO network to be similarly accessible with people able to support local charities, initiatives and even individuals.
“It’s almost like a Kickstarter model where you can support a traditional charity, like Oxfam for example, but you can also support your local school, kids club or poet if you like."
The objective is that this will emotionally engage subscribers to join and stay with the mobile service.
The American-born entrepreneur suggests that traditional network operators – TPO competitors include market leader O2 as well as Tesco Mobile and Giffgaff – have become trapped in a vicious cycle of marketing. They spend vast sums on campaigns to acquire new customers – in an industry where “there’s some differentiation [among providers] but not a lot” – and then even more on PR initiatives to try and retain.
He explains that, by and large, the fundamental business model for many players hasn’t changed in 30 years. “It [a mobile network] is an item that’s effectively a commodity product – basic connectivity – with a massive advertising spend to sell it. So let’s take all that massive advertising spend and do something good with it,” he adds.
“Look at Tom’s Shoes [a company which gives a pair of shoes to an impoverished child for each pair the company sells]. It’s managed grow very quickly without spending much money at all and it’s because it has a great story.
“It used to be if you really liked something you would tell five people – now the average person has 314 Facebook friends. That is the concept of the social networking platform; to allow things to go viral and for people to promote the things that they care about.”
But will TPO ever be a threat?
The brand has always maintained that it’s not out to become the biggest operator.
By 2021, it hopes to hold a two per cent share of the UK market, which at present has approximately 83 million subscribers to mobile services. Wales expects to achieve the same when TPO launches in America later this year, which has around 335 million subscribers.
It has some way to go to reach this target. According to the company’s most recent filings, UK subscribers reached 14,032 by December 2014; minute numbers in comparison to those its competitors report. It does, however, represent an increase of 140 per cent six months earlier.
It also beats competitors when it comes to the value of its customers.
Average monthly revenue per subscriber sat at £11 for pay as you go contracts, higher than the comparable UK average of £5, and £17 for pay monthly subscribers, which is in line with similar SIM-only propositions in the UK. It also has a monthly subscriber churn of less than three per cent, “the lowest in the industry”, which Wales attributes to the emotional connection consumers feel towards the brand.
Monetising the vast amounts of data any mobile network inevitably collects is an idea Wales seems uncomfortable with.
“We’re not advertiser driven so a lot of the ideas around data just aren’t what we’re focused on,” he explains. “Wikipedia has always been real strong about this kind of thing, not sharing data with anyone, and I wouldn’t want move away from that."
But the prospect of potentially opening it up to charities who could use it to inform their own brand activity was not off the cards, as long as user privacy was properly considered, according to Wales.
TPO is on track to launch into South America, South Africa, Asia and the rest of Europe over the coming years, depending on how quickly it can establish partnerships with carriers [in the UK it piggybacks on EE’s network].
“We raised £20m in the UK on our IPO and a portion of that money is ear-marked for doing long terms deals. There’s a lot of places where this model would make sense but it just takes time to build," Wales adds.
The Drum also caught up with TPO co-founder and chief executive officer Mark Epstein, who says he hopes the success of the social business with City investors will push other companies to become more socially responsible.
“It’s great for the whole industry. It’s an interesting debate, not-for-profits, but the world can’t exist on not-for-profit so you can’t credibly get that to a financial institution. What you can do is make a profit in the right way […] and they can get bought into by banks and investment funds.”
The TPO social network is currently in beta testing, with a view to launch in the coming months to coincide with the mobile network's move into America.