O2's GiffGaff Launches UK's Cheapest PAYG Mobile Network

Telefonica's O2 has quietly launched a new UK subsidiary called Giffgaff which markets itself as the people powered mobile network and incidentally proposes the cheapest PAYG tariff across UK.

Like failed MVNO Blyk, GiffGaff is betting on its own customers to become head crowdsourcers and get subsidised (or even paid for) for recruiting new members while keeping operational costs low.

This approach is not new and even 3 networks has set up a free agent section where customers can earn £5 for every SIM that is topped up by £10 or more. Giff Gaff gives £5 for introducing a new member, £2 per referral and 50p per each friend introduced to the service.

In a similar way to GiffGaff, 3 Networks has also setup email and social networking tools to facilitate the online marketing process. GiffGaff will be an online only MVNO with no phone numbers and help only from emails and forum, adopting a no frill, Easyjet-like approach.

As for GiffGaff's prices, they are the best in the country. Calls, texts, pictures messages, call forwarding and video calls to Giffgaff phones plus all 0800 numbers are free, provided they do not last more than 60 minutes.

Crucially calls to other networks costs a mere 8p per minutes compared to 25p for O2 while texts cost only 4p per message. Furthermore, topping up £10 will give unlimited browsing for six months although this is subjected to fair usage policy.

Other rates are quite competitive and even a Twitter text update won't cost you a single penny while 0871 numbers are only charged 20p per minute.

Our Comments

The new mobile virtual network operator (or MVNO) is looking to use its user base to help it grow its revenues rather than an armada of sales persons and high street stores that are ultimately expensive to maintain and hugely capital intensive.

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