Mobile Network Comparison

Last time we chatted about Fairphone, solar panels and a Living Wage – what’s the discussion going to include this time? Continuing on from part 1, we bring you the rest of our exclusive interview with The Co-operative Mobile:

You’re running on EE through Transatel. What is Transatel, how does it work and how did you decide to go with EE?

Transatel is an MVNA or “MVNO enabler”. It was awarded “Best MVNA at the MVNO World Congress 2014” in Rome. Transatel have the platform already set up with EE so we are able to launch the service quickly and efficiently.

There are other MVNOs offering better value on their monthly bundles. How can they afford this and why is your offering superior?

We are not convinced that some of the other networks can afford the prices they’re offering. For pay monthly, the market expects handset inclusive bundles however handset costs are high if you do not have the volume of the large networks. We actively promote SIM only at the point of purchase so that customers can choose whether they need buy a handset or not and are transparent about the cost of the handset.

Most of our pay monthly sales are from our existing fixed line base and we offer additional benefits including free calls from landline to mobile and calls between customer mobiles don’t use up bundle minutes.

Our Pay As You Go offer benefits from per second billing and decent rates with adaptable bundles that our customers can tailor for their own requirements saving themselves money and enabling our customers to make the right choice for their usage patterns.

Members will also benefit from the dividend which last financial year amounted 2.5% of purchases (exclusive of VAT).

Our UK based and award winning customer services are always mentioned as one of our assets as per the posts entered here. An example is posted below.

“Once you are a customer, they are happy to review your account at any time and ensure you are on the cheapest tariff for your usage. I am proud to be a customer and would thoroughly recommend them”. Angela Wright, Sheffield 2nd March 2014.

Some good points… What’s your target market and what’s the uptake been like so far? What are the plans to grow?

Our target market is the “ethically conscious consumer”. We were recently ranked “Best Buy” by Ethical Consumer Magazine for mobile, broadband, line rental and e-mail provision, which makes us the choice for this type of consumer concerned with making their money work hard. The ethical share of the retail market is around 5% and sales of ethical products have grown dramatically from £9.6bn in 2009 to £54.4bn in 2012, according to Ethical Consumer Magazine’s statistics.

The pay monthly product was introduced in 2010 and was aimed at our existing customer base on fixed line. This product has been steadily growing as our customers take up the service. We have seen great interest in the Fairphone which has been recently launched.

It is early days still for Pay As You Go and we have some plans for more promotion in the Co-operative stores, which is where 85% of our SIM activations have come from. There will be fixed position display racks within most of the 2,800 stores of the Co-operative Group, giving us precedence on the racks which will be branded with our logo. We also expect uplift on our other services through promotion of our home phone & broadband packages on these racks. These display racks are expected to be installed by December of this year.

Another strand to our plan for growth is to provide a 10% credit on each PAYG top up to all holders of an NUS Extra card. This will be run in conjunction with the 10% discount offered by Co-operative Food, which in terms of revenue, is the best performing of the benefits available to NUS Extra cardholders. This ties in with our sponsorship of the “Student for Co-operation” conference and our support for student ‘housing co-ops’. There are other plans to draw on the benefits of lower rates for texts and calls between Co-operative Mobiles through “Refer a Friend” schemes.

Historically, our customer base has been predominantly older (45 and above). According to a survey conducted on our behalf by Deloitte in 2013 as part of their social innovation pioneers programme, these people have been attracted to us and retained by us due to our customer service excellence. Younger customers are attracted more by product range. We are working hard to improve this aspect of our service as explained earlier, working to bring 4G and to increase data allowances on our mobile network.

Thanks for chatting to us! For our final question, was there a specific point when you realised the network would definitely be a success or has this not come yet?

The pay monthly service has shown steady growth from the beginning so we have always had confidence in it being a viable product. We believe that with the launch of the new display stands in-store, together with NUS Extra and other initiatives that our PAYG service will become profitable and add to our portfolio of successful services Early in the New Year.

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The Co-operative Mobile is a MVNO that’s part of The Phone Co-op. Across the whole company they have over 10,000 members and made revenues of over £10 million.

The mobile division is just a part of the whole group but it also operates under the Rochdale Principles which require payment of a yearly dividend that is proportional to each member’s spend. Last year, this came to 2.5%. They also offer great UK coverage through EE.

Like many co-ops, they do loads of good and last year they were Accredited as a Living Wage Employer by the Living Wage Foundation. They also sell mobile phones alongside their 30 day rolling contracts and they recently because the exclusive UK stockist of Fairphone’s great dual-SIM FPU1 “ethical” smartphones.

We had a chat to ask them a few questions about the mobile network and learn a bit more:

You started with mobile way back in 2010 – can you explain a little more about the genesis of the company as well as the management team and their background?

We were founded in 1998. Originally, we provided landline calls at lower rates than the competition. Since then, we have added broadband, line rental and then mobile in 2010. We have traded profitably every year since our foundation, with the exception of 2005-2006, which was affected by our rescue of an internet co-operative in Manchester, which we incorporated into our business.

Our decision to expand into mobile services was taken in response to demand from our customers and members and to market trends affecting landline revenues and margins experienced during the 2000s. We started with post-paid services in 2010, expanding into Pay As You Go in 2014. This move into mobile has broadened our appeal and resulted in increased revenues and turnover. Last financial year, we made £555,000 profit before distributions.

One problem we have with your question is that we are not a company, we are a consumer co-operative. This means that we are owned and ultimately controlled by our customers who choose to become members. As we are owned my our members we aren’t focussed on putting money into the pockets of external shareholders. A customer becomes a member by investing between £1 and £100,000 into our co-operative. Of our 27,000 customers, over 10,000 have chosen to become members, investing £4,650,000 into our business (as of 28th Feb 2014).

In return, they receive interest on their investment (currently 2%) and a share of any profit. Last year the dividend paid was 2.5% of the members’ annual pre-VAT expenditure with us. Last but not least, our members benefit from having a say in the way that their business is run and how the profits and cash reserves are invested.

Our management team is experienced and balanced. You can see details of their experience on LinkedIn and our Chief Executive is Vivian Woodell, our Head of Operations is Craig Lumsden, our Chief Financial Officer is Lisa Logan while Fiona Ravenscroft is our current Head of Products.

Good point and thanks for correcting us! What does being a co-operative mean to you personally and why do you think it’s important?

Co-operation is embedded in the DNA of our business. We are a consumer co-operative that exists to serve its members, and inspire others with an alternative, better model for business and the economy.

This means that we operate always only with the support of our membership. Our aims and beliefs are not the same as our corporate competitors.

We encourage our customers to think about what they really need and not to consume products for the sake of consuming products! This philosophy resonates with our customers and members and means that our churn rate is lower than the competition. Our members want us to do good with their money, while taking care to offer them the service at the best possible price.

As well as being a co-operative, we are a social enterprise and were recognised as “social enterprise of the year” in 2008. A social enterprise is an organisation that has strong social aims and uses a business model to achieve those social aims, reinvesting all or the majority of its profits to further and support those aims, rather than creating private wealth.

Could you describe the brand in three words?

Co-operative, ethical, competitive.

Makes sense. Now, the MVNO market is incredibly saturated and competitive these days and customers only seem to care about the bottom line – what’s your USP and what would you say to convince someone to join?

I would not agree that customers only care about the bottom line; based on an online survey of our Pay As You Go customers that we conducted just recently, 6 months after launching, we have a 91% customer satisfaction rate with 89% saying they would recommend the service to a friend. Our fair pricing is the number one reason cited for customer satisfaction and next to our great rates our co-operative business model is the primary reason our customers mentioned for choosing us. Note also that according to Ethical Consumer Magazine’s statistics the ethical share of the retail market is around 5% which is still a lot of customers for an MVNO.

I would say that Our Pay As You Go are competitive rates matching the other supermarket tariffs together with honest pricing and excellent customer service. We explain our proposition clearly, people understand what we’re doing and come to us because they want not only competitive pricing but care where they spend their money.

We are a social enterprise and a Living Wage employer. As of October 2013, we had invested £234,000 of our profits in the Co-operative & Social Economy Development Fund, of which £146,500 has so far been invested into ventures such as solar and wind power as well as community pubs and community-owned football clubs. In addition, we have invested more than £622k in solar panels.

Since the business started we have been running affinity schemes; charities, non-profit and co-operative organisations can raise money by promoting our service to their members and supporters and earn a commission based on their members’ spend with us. Last year (up to August 2013), we paid over £59k to partners such as The Soil Association and The Big Issue.

Our ethical reputation has meant that we were engaged as the sole UK stockist of Fairphone, a smartphone which puts social values first.

So there you go… That’s it for part 1 of our interview. We hope you found it as interesting as we did. And if you have any questions about some of the issues and products covered in this discussion, please let us know in the comments below…

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