The Phone Co-op is an ethical telecommunications services provider, selling everything from broadband to landline phone rental, including mobile phone services, website hosting and other internet services. It was established in 1998 by the current chief executive, Vivian Woodell, who started the business in his spare time, with the aim of providing affordable phone calls to not-for-profit organisations. Within a year it had converted into an IPS co-operative society, in response to the growing residential consumer demand for an alternative to the then dominant British Telecom.

Like other IPS co-operatives, the Phone Co-op has an open membership policy. When customers start buying a service from the Phone Co-op they are invited to become members, by opening a withdrawable share account and investing a minimum of £1. This entitles the customer to a vote at the AGM, to elect directors, and to receive a dividend based on their purchases from the co-operative, currently set at 1.5%. They also receive interest on their share account, currently paid at 5.5% gross per annum.

Membership has grown quickly and steadily in line with the growth of sales and customers. Over half of all Phone Co-op customers have chosen to become members. The annual turnover in 2007 was just under £7m, more than 100 times greater than its first year sales. Membership stands at 6,735 and these members have over £1.6m in their share accounts. An analysis of shareholdings in 2006 found that more than two-thirds of the share capital was provided by less than 4% of the membership. There were nine members with the maximum allowable shareholding of £20,000. The average investment per member was just over £200, whilst the median investment was just £30.

Share capital has increased every year since the co-operative was established. The net growth rate in share capital still exceeds 25%, with new deposits outweighing withdrawals by a significant margin. Withdrawals stood at 14.3% of the total share capital in 2007, outstripped by new deposits which stood at 32%. Members can withdraw their share capital at one week’s notice, at the discretion of the board.

The Annual Report for 2007 says that its strong balance sheet puts it “in a very strong position to pursue acquisitions and other growth opportunities in the future”. It allocates some of its surplus to a Co-operative and Social Economy Development Fund, currently standing at over £70,000, which is invested in other co-operatives and social enterprises.