Locus Telecommunications Agrees to Settlement in Phone Card Class Action Suit

Locus Telecommunications, Inc. announced last week that they had agreed to a settlement in a national class action settlement suit brought against them in New Jersey Court. In the lawsuit, plaintiffs alleged that Locus distributed or sold prepaid and rechargeable calling cards without fully disclosing the applicable rates and charges associated with those cards. While Locus did not admit to any wrong doings, they did agree to settle this claim.

Locus agreed to provide $3,663,520 of replacement pins to eligible consumers in the form of a replacement pin with a value of $0.50 each ($0.10 a minute to US and $0.25 a minute to certain international destinations). For each $5 card purchased, consumers are entitled to 1 $0.50 pin. The kicker here is that the customer must have their original pin in order to claim more than 1 replacement pin. Customers wishing to receive the replacement pin(s), must make a request within 6 months from the date of the settlement and can do so by visiting the following web site.

In addition to the replacement pins, Locus agreed to donate $300,000 to charity and agreed to use another $200,000 in product discounts in the upcoming months. IDT had a similar suit which they settled in much the same way a few years back.

Hot Dog Prepaid Phone Card TV Commercial

Here is a commercial for the Hot Dog Phone Card from SDI.

Locus Telecommunications Inks A Deal With Best Buy

Locus Telecommunications announced last week that it has signed a deal with Best Buy to sell it's prepaid wireless Universal SIMcards and recharge cards, branded O2 Wireless, at all Best Buy locations throughout the USA.

"With this new O2 Wireless service, cost-conscience consumers can ditch their expensive cell phone contracts and purchase as much or as little airtime they want."

The SIM cards work with any unlocked GSM phone and is ideal for business traveler and students who do not need the heavy cost of monthly plans and want something for which they only have to pay for what they use! O2Wireless also has a very significant coverage area supporting all major metro areas and much of the East Coast and West Coast (they do not have much coverage in the Midwest.

This deal is sure to be huge for Locus as it will give their MVNO business a huge amount of eyeballs which is relatively hard in todays comepetitve landscape.

IDT Posts It's First Quarter 09 Results

IDT just announced their Q1 09 results yesterday and the results were as expected! The company is still seeing overall loses but at a much reduced rate than in previous quarters largely because they have paid out most of their outstanding debt to the IRS, severance packages etc.... They have also significantly reduced their operational expenses by streamlining their work force and working on Network efficiencies.

They seemed optimistic about the prepaid pone card business in the United States claiming that their legal actions against unfair marketing practices have helped turn the tide in their business and are seeing steadier numbers now.

Overall I won't bore you with all of the financial results (if you want to see them please view their official release) but the long and short of it is that IDT is still continuing to dump unprofitable business units and is seemingly just in survival mode right now! Other than Zedge, and Shale Oil they don't appear to be working on any long term new business strategies and as a result the stock prices didn't go up too much on the news of their results. Investors want to see the possibility for long term growth, but IDT seems to be in short term survival mode at this point and it is clearly visible.

Survival mode is not necessarily a bad thing, as IDT needs to get its core business's act together, and most importantly profitable, before it can go out and spend money on long term strategies. It looks like IDT still has a few quarters to go before it sees true operational profitability but at least it is a step in the right direction.

CVT Prepaid Begins Winding Down

I heard through the grapevine that CVT has starting laying off employees and is beginning the process of integrating into the STI platform. All of their new cards will most likely be created on the STI platform and a migration of pins will most likely take place sometime down the road as well.

The writing was on the wall when STI purchased CVT almost two months ago. It just made no economic sense to maintain and manage two platforms that served the same function. To STI the biggest value in acquiring CVT was in the brand name and removing a major competitor. While I'm sure STI will keep some of the CVT employees, the reality is that they probably won't keep that many as most will be redundant.

It will be interesting to watch how this whole process unfolds and to see how STI will treat the CVT brand name.

Calling Card Nuestra Liga - Phone Card Of The Month

Here is a commercial for the series featured in this months "Phone Card of The Month" section. Service provided by CVT.

November Poll Results - Do You Think all of the Recent Legal Action is a Good Thing for the Phone Card Business?

The November Poll Question "Do you think all of these proposed new laws and lawsuits are a good thing for the phone card industry as a whole?" is now closed and the results are in and fully tabulated.

• 82% of you felt all of the legal action was a good thing for the business
• 11% of you felt all of the legal action was not a good thing for the business
• 5% of you were unsure

The results surprised me a little as I would have thought that many in the business would have been a little more pessimistic since there have been attempts in the past to change the business and never to any noticeable effect.

Be sure to vote in this month's poll - What do you think 2009 will be like for the phone card business? To vote just go to the rand hand side of the page and select the answer which you believe most reflects your opinion. Only 1 vote per person please!