NY Coucilman Pushes for Probe on Prepaid Cards

The latest political figure to jump on the crack down on phone cards movement is Democratic councilman Eric Gioia form Queens. While not as high profile as some of the other political figures involved in this movement, it shows clearly that this movement is gaining momentum and will be an issue on many government officials desks in the coming year.

In this case Gioia is bothered by the fact that many cards don't deliver the advertised minutes and are delivering confusing messages on their disclaimers resulting in consumer confusion. He has vowed to bring this issue to the Department of Consumer Affairs and State Attorney General Andrew Cuomo.

To read the full release click here.

Federal Trade Commission Takes on Clifton Telecard Alliance

Well it looks like Clifton Telecard Alliance (CTA) is being chased down by the Federal Trade Commission (FTC) for the misrepresentation of the number of calling minutes consumers get on their cards. CTA seems to be have been singled out in this particular case due to it's size and dominance in the calling card market with the FTC claiming CTA had sales of $28 million alone in just the last quarter of 2007.

The FTC cite one card which was supposed to deliver 40 minutes of calling time to El Salvador (according to the poster) and cut the call off after only 27 minutes. In all the FTC purchased 46 different CTA cards and claim none of the cards delivered the total advertised minutes.

The FTC has asked that the court demand that the company halt these practices while the case awaits trial and they have also asked for a court appointed monitor to oversee the business to make sure the process doesn't continue. The trial date has yet to be set but the FTC is trying to do as much in their power to curb this companies practices even before their day in court.

Unfortunately I don't think CTA is the one mandating the number of minutes given on a card! All distributors would love to have cards that deliver the true amount of minutes (although insanely high) but the carriers are the ones who play the games.

Just a warning to all phone card providers and distributors this is probably the first of many of these types of suits. The movement in Washington is to crack down on the calling card companies deceptive minute practices and is in large part thanks to the heavy lobbying IDT has undertaken as of late to clean up their business!

Here is a link to the The full FTC complaint against CTA

Phone Card Commercial for Cabal

IDT Spanish language phone card commercial.

Company Profile: CVT Prepaid Solutions

CVT Prepaid Solutions, Inc.

Founded: 1997
Ticker Symbol: N/A (Privately Held Company)
Employees: 60
Location: Great Neck, NY
CEO: Michael (Mike) Acevedo
Fiscal 2007 Sales: $8.2 Million


Timeline:

1997: Founded by former CEO Peter Sicilian under the company name of Orion Telecommunications (OTC).

2001: Performs significant build out of their back end network with the help of Verso Technologies equipment (NACT switching technology).

2004: Citing the inability to handle the volume of sales properly, OTC files for Chapter 11 Bankruptcy protection (http://bankrupt.com/misc/orionconvert.pdf).

2005 (April): Company unveils it's 100 day back-on-track program after emergence from Chapter 11 bankruptcy protection.



2005 (May): company is one of the first in the US to start issuing die cut phone cards with special themed shapes. The first such card was the Mexico Futbol card shaped in the form of a soccer jersey


2005 (August): Company changes name to CVT Prepaid Solutions, Inc. names new CEO Mike Acevedo and moves it's headquarters from Bayside NY to Great Neck NY.

2007: CVT, one of many companies, is sued by IDT Telecom and Union Telecard Alliance for unfair fraudulent practices. They first stand hard, issuing an open letter to the industry denouncing this lawsuit but later in the year agree to a private settlement on the lawsuit.

Sources:
http://phx.corporate-ir.net/phoenix.zhtml?c=105061&p=irol-newsArticle&ID=213901&highlight=
http://www.allbusiness.com/company-activities-management/product-management/5140609-1.html
http://biz.yahoo.com/ic/109/109764.html
http://www.cvtprepaid.com/about/presskit.asp
http://news.moneycentral.msn.com/ticker/article.aspx?symbol=US:IDT&feed=PR&date=20071129&id=7873005
http://www.businessweek.com/magazine/content/07_30/b4043079.htm

Virgin Mobile Falls Way Short of 4th Quarter Subscriber Goals!

A little over a year after going public, Virgin Mobile continues to perform poorly. In their 4th quarter they added 209,669 net subscribers far short of their 400,000 estimate. The company also signaled that their Q1 net subscriber adds will continue to be poor, sighting the poor economy and less disposable income.

The news was not taken well by Wall Street, with a huge dip in the stock price! The stock fell by over $2 a share after this announcement, from a little over $4 to just over $2. A far cry from their $15 plus price of 6 months ago. To be fair this trend seems to be common in the telecommunications sector with other Telco companies like Sprint, IDT, and Verizon also falling on tough times.

US Economy Continues to Tank! What Will This Do To The Phone Card Business?

As we creep closer and closer to a full blown recession most analysts believe that consumer spending will decline significantly, hitting non essential goods providers the hardest. The question that I get asked frequently is how will this affect the prepaid phone card business?

Phone cards are not technically classified as an essential item, but at the same time they serve a need that does not disappear just because times are bad. The need to talk to your family and friends abroad is always there it just might happen less frequently as a result. So the customer who used to call his mother 7 times a week now might only call 2 or 3 times a week to keep his costs down.

The reduction in usage is not welcome news to an industry already on hard times but will just force those still left in this business to run more efficiently or be forced out! Mergers and banruptcies will become more common and a landscape of only a handful of players is likely to emerge. The bigger companies like IDT, Ibasis, STI, and Locus will probably survive, albeit smaller, and most of the mom an pop providers will disappear. Distribution will also change, with many of the independent distributors leaving and a new distribution group coming in to scrape up the auxiliary business (larger one stop convenience store distribution companies will pick up phone cards).

While this is just my opinion, I still think whatever the path this recession takes, the phone card business will emerge as an industry far different than we have known.

Featured Online Phone Card Store: nobelcom.com

Nobelcom.com

If you are a regular seller or buyer of phone cards online you are no doubt familiar with the calling card store called nobelcom.com. Online since November 2002 nobelcom.com has been a dominant force in the online retail space with cards like Long Call World and Most Minutes World. Owned and operated by Thomas Knobel of NobelTel, Ltd, this company has quickly become the leader in the international phone card market. Their position as a global carrier helps them offer some of the lowest rate phone cards out there today.

Just about all of the phone cards on their site are fully rechargeable, reducing the need to have to remember a new pin number every time you need a new card.

NobelTel, Ltd headquarters is located in Hamilton Bermuda and also sells prepaid long distance phone service through it's Enjoy Prepaid brand and post paid long distance service through it's NobelTalk brand. The company also maintains a strong carrier wholesale business which helps them support their extensive retail offering while keeping their rates low.

Traditional Telco Decline

If you look at the stock market performance over the last year you will see an alarming trend among traditional pure telco providers. Companies like IDT, Level3, Ibasis, and even Qwest have seen dramatic reductions in their overall stock prices.

>>IDT went from around $11.20 a share in March of 07 to roughly $3.70 a share in March 2008

>>Level3 went from around $6.20 a share in March of 07 to roughly $1.83 a share in March 2008

>>Ibasis went from around $10.00 a share in March of 07 to roughly $3.75 a share in March 2008

>>Qwest went from around $8.70 a share in March of 07 to roughly $5.09 a share in March 2008

This trend is no doubt not a coincidence and is reflective of these companies poor performances financially and a sign of the changing industry. Unless you are a Telco provider offering a mobile service like Verizon, Sprint and others, your business is not part of the future of Telecommunications. Analysts see mobile as the future and are not impressed by anything a traditional player can come up with... Even VOIP providers like Vonage and Packet8 are seen as yesterdays technology and not collecting much on the trading floor.

I have a feeling we will be seeing a lot of consolodation going on amoungst these traditional Teleco's in the coming months and years. It is the only way they will be able to continue as market share keeps dropping.

Jackpot Phone Card TV Commercial

Funny commercial by Telecard Network.

Hi Connect Phone Card Commercial

A card that I never heard of before but the commercial seems to be of good quality and thus worth listing here.

Maine to Vote on Phone Card Bill Wednesday

The first state to take an active vote on a legislation affecting the way calling card companies operate is going to be Maine. On Wednesday the house will vote whether to adopt this new bill or not!

The bill is mostly the result of the recent AT&T inter-state rate increase fiasco and will do the following:

Force phone card providers to deliver all of the minutes they were promised
Provide ample notice when rate increases are to go into effect
Not increase rates on cards that were bought under the promise of the old rate (I don't know how they will enforce this).

Surprisingly the bill has met little opposition from outside parties like Telecom companies!

Read the full article here

Lisa Brown Now With The Prepaid Press

For the last year or so I noticed that Lisa Brown's name was absent from any of the Intelecard materials I receive in the mail or on the web. She had been one of the major faces of the Intelecard publication and Expo for years but I just assumed she either was still with the company in another role or had left for something else.

Well to my surprise I received an email yesterday from the Prepaid Press promoting their upcoming Las Vegas expos and whose name was on the email... Lisa Brown.

Looks like she jumped from that sinking ship and is now the expo coordinator for the Prepaid Press. I can't say I blame her, the Prepaid Press has been putting out a quality publication lately and Intelecard has fallen flat on their face, with a website that looks like it was programmed by my 5 year old, no more magazine and having to resort to having an expo in Edison NJ instead of sunny Miami.

Interesting Article on How Mobile Phones Have Changed Telecom

I came across a Washington Post article by Joe Brancatelli recently which I found to be a good take on how the Mobile phone has changed the average business traveler's life for the better. While this article is written from the business traveler's perspective, the case holds true for average Americans as well.

With the new unlimited plans just coming out from all of the major US cell phone providers (at&t, Sprint and Verizon), the marketplace is sure to move towards mobile even further than it already has! It won't be long until we see world plans just like the VOIP providers are offering.

You can read the full Washington post article here: Phoning Home

Blackstone Signs Distribution Agreement with Freedom Wireless

Blackstone Calling Cards, Inc. will now be distributing Freedom Wireless phones, branded as Zebra Unlimited and Zebra Everywhere. Freedom Wireless, a US based MVNO, hope to utilize Blackstone's extensive calling card distribution channel and advanced point of sale technology to help them expand their customer base. the view is that this will help gain a larger market recognition for Freedom Wireless brands and help tap into new markets that Blackstone has at it's fingertips.

According to Freedom Wireless:

"customers will enjoy the convenience of an unlimited long distance, flat rate GSM cell phone plan, that is economical and has great coverage without the worry of leaving your immediate calling coverage area or unanticipated high monthly bills. Zebra Unlimited prepaid SIM's allow customers to pay a flat rate monthly amount on unlocked GSM cell phones for as low as $40 per month. Additionally, Zebra Everywhere offers value-priced per-minute plans in the 50 United States and Canada. Zebra prepaid brands require no annual contract and no credit check."

According to Blackstone, the phones should start being available in April this year.

The full press release can be seen here

Comercial Cabal Phone Card

A commercial for an idt phone card called Cabal.