The People's Operator: an ethical mobile network and a social one

The proposition was clean enough to explain in a sentence. Buy your mobile service from The People’s Operator, nominate a charity or cause, and a share of what you spend goes to it — with updates on how the money was used. Businesses could route their corporate social responsibility commitments through the same mechanism.

TPO launched on 19 November 2012, owned entirely by three co-founders: Andrew Rosenfeld, who provided the primary financial backing, Tom Gutteridge and Mark Epstein. It operated as a virtual network, reselling capacity rather than owning any: in the United Kingdom over Three, having initially selected EE, and in the United States over Sprint’s CDMA network and later T-Mobile’s GSM network from the week of 21 March 2016, where it offered $32 a month for unlimited talk and text with 2 GB of data.

The Wikipedia connection

Jimmy Wales joined as co-chair of the board and took what was described as a strategic stake. His stated reasoning was about growth mechanics: “TPO has huge potential for viral growth and the more it grows, the more money will pass to the people and communities that need it.”

Shortly after the initial public offering — a valuation later described as a “hugely overblown price” — the board appointed Wales as Rosenfeld’s replacement as executive chairman. In January 2017 the company announced he would be replaced as chairman.

The 2015 news that carried furthest, and which Wikimedia’s own press clippings recorded, concerned the second product: an advertisement-free social network. The community was established to give users a place to discuss the charities and causes they supported and to donate to them directly. Wales’ association with Wikipedia made “ad-free social network” a credible phrase coming from him in a way it would not have been from most founders, and that credibility was the story.

What the filings showed

The gap between the proposition and the delivery is documented, and it is the most important part of the record.

TPO advertised that 10 per cent would pass to nominated causes. According to company filings, less than 3.8 per cent of gross income was actually distributed to them.

The likely mechanical explanation is mundane rather than sinister: a $50 minimum threshold applied before any charity could receive a disbursement. A model that spreads small amounts across a long tail of causes generates a large number of balances that never reach a payout threshold, and money that never reaches the threshold stays where it is.

The TPO Foundation, a registered charity, was dissolved at the end of 2014. The company was never profitable. Its stock lost nearly 90 per cent of its value in the year and a half following launch.

The end

Trading in TPO shares on the London Stock Exchange was suspended on 2 July 2018, because the company had failed to release its 2017 financial reports. In December 2018 it received a cash infusion from the holding company that was majority owner of Lycamobile. On 13 February 2019 it announced that it had entered administration, and its stock ceased trading on 26 February 2019.

Why the model was harder than it looked

Two structural problems, neither of which is about intentions.

A virtual operator has almost no margin to give away. It buys wholesale access at a price set by the host network and resells at a retail price constrained by competitors who have the same wholesale cost and no charitable commitment. Ten per cent of revenue is a very large share of the gross margin available in that business, which means the promise is either small in absolute terms or unsustainable.

Micro-donation at the long tail does not clear. Splitting a modest revenue stream across many nominated causes produces small per-cause amounts, and any administrative threshold designed to keep transfer costs sensible will trap a substantial fraction of it. The threshold was a reasonable operational decision that made the headline percentage undeliverable.

The ad-free social network faced a third problem that had nothing to do with either. Removing advertising removes the revenue model, and what replaces it has to be a product people pay for. In this case the intended replacement was the mobile business, which was itself not profitable.

What remains is a well-documented case of a proposition that was appealing, specific, publicly measurable, and measured.