Look Out World! Vonage Launches Digital Prepaid Calling Card!

Vonage put out a press release today announcing the launch of it's new stand alone, Digital prepaid calling card offering. A first for Vonage! They have long had a calling card feature bundled with their home phone service but they never offered a stand alone calling card until now.

The card is available exclusively online and is can be purchsed in $5, $15 or $25 amounts. The $15 purchase amount comes with a limited time intro promotional $5 bonus and the $25 purchase amount comes with a limited time inro promotional $10 bonus. The product seems to have very aggressive, yet not rock bottom, A to Z rates on par with it's main competitors like Pingo and PennyTalk. Some sample rates for the card are as follows:

• India $0.017/min
• Mexico $0.033/min
• UK $0.01/min
• Philippines $0.109/min
• Pakistan $0.111/min

New Vonage Digital Calling Card

There are no connection fees, no monthly fees and is fully rechargeable! However, the card is not completely fee free, charging a $2 inactivity fee per month after 6 months of no use.

The card also offers pinless dialing from up one registered phone, speed dial settings and a convenient auto recharge option.

For more information about this card, visit the Vonage website at  http://lp.vonage.com/callingcard

New Year Same Old Trend - Phone Card Sales Declining

Well we are now into the new year and I started to reflect on the past year and the year ahead. For the most part 2009 saw a substantial decline in overall phone card sales and I'm afraid we will continue to see the same trend throughout 2010. Prepaid Mobile phones with competitive international rates are only going to get more aggressive this year and with increased penetration of broadband in recent immigrant households, VOIP services like Skype and Vonage will also continue to errode the phone card market share.

Nobody beats phone card rates, but drop dead lowest rates is not always the most important factor, the convienience of these other services along with decent (and clean) rates seems to be the deciding factor in most purchases.

I don't want to be all gloom and doom here so I will point out that there are some positive trends that I have noticed:

1. Prepaid Mobile sales have been growing (lower margin and higher risk)
2. These new International Mobile Top-Up products have delivered a nice volume of sales (lower margin)
3. Prepaid cash cards have seen a slight increase in demand

While the above have certainly helped, they have not replaced the amount of traditional phone card sales volume lost. If we could just get another product like International Mobile Top-Up, I think we would all be able to return to our business levels of years past!

Here's to hoping for something new and revolutionary will come in 2010!

Cheers!

Publish Post

Vonage Expands Its Unlimited Plan to Include Calling to Over 60 Countries

Vonage, who is desperate to turn the tide against it's churn, has announced that it has expanded it's $24.99 unlimited calling plan to include additional countries. When they first started, the plan only included unlimited calling to the US, Canada and Puerto Rico but about a year ago they added the UK and a few other cheap international destinations into the plan. Well now they have upped the number of countries, adding destinations like:

• Argentina
• Australia
• Bahamas
• China
• Colombia
• Czech Republic
• Dominican Republic
• China
• Poland
• Russia
• Romania
• Thailand
• Turkey
• & Many More!

There is no way that Vonage will be able to make money on these plans with some of these countries they included (some countries costs our well more than 2 cents a minute)! Their fraud department is going to have to triple in size to deal with all of the customers signing up and sending these devices worldwide. Heck, even if they manage to restrict the ip addresses to just US customers, they are still going to have a lot of customers with huge amounts of minutes used. If the call shops get a hold of these they could easily blow this plan up!

Their terms of service list anything above 5,000 minutes as more than normal residential use but 5,000 minutes to Turkey, if you figure a cost of roughly 2 cents a minute, will cost Vonage almost $100 a month... a huge loss!

Anyway you cut it, this desperate move by Vonage is a bad thing for the international calling card business! Our sales are most assuredly going to decline... how could they not... Vonage is basically giving away the call time! How is someone who wants to make a profit and not play any games supposed to compete? This probably goes down as one of the dumbest most desperate moves in the long distance business! Thanks Vonage... hope you take a huge bath with this new plan!

Comcast Now The Third Largest Home Phone Service Provider in US

It took just less than three years for Comcast to become the third largest home phone service provider in the US, overtaking Quest Communications and just behind Verizon and at&t.

Comcast service is available in 39 states and they currently claim to have 6.47 million subscribers. Their success comes no doubt from their ability to bundle the phone service with their existing cable TV and Internet service base.

Unlike their competitors at&t, Verizon and Quest, who are losing subscribers at an astounding pace, Comcast is still expected to see subscriber growth in the coming years as they continue to push the high savings that comes with their bundled service options. However it is unlikely that Comcast will pass either Verizon or at&t anytime soon as both companies still have in excess of 20 million subscribers each.

Verizon has been fighting back recently with their fiber optic offer (FIOS) which aims to not only slow the churn of home phone service customers but looks to gain new business in the Cable TV market.

More Bad News For Vonage!

Less than 48 hours after the ruling against Vonage in the Sprint Nextel patent lawsuit, Vonage got more bad news in the announcement that their appeal of the Verizon 55 million dollar patent infringement suit was denied. However, they did manage a small victory in that there were originally three patents they had been found to be violating but the courts sent back one of them for further review. If they manage to get the third patent violation dismissed, they will likely only have to pay around 40 million in damages. It is also still a possibility that the amount could be changed, since the judge asked for the damages payout to be re-examined as well!

Either way Vonage is looking at paying tens of millions of dollars to Verizon and a company in their battered state would be hard pressed to survive a payout like that!

Their stocks also took a beating dropping below $1 a share for the first time ever ($0.99).

Vonage Found to be Infringing on 6 Sprint Patents

Vonage just lost a patent infringement case brought by Sprint/Nextel. The lawsuit claimed that Vonage had knowingly used technology that was patented by Sprint - Nextel and the court agreed finding Vonage liable for approximately $69.5 million (5% of Vonage's revenues during the time period). Vonage plans to appeal the ruling but has already started on workarounds on the technology in question.

This marks the second major loss in court by Vonage this year , loosing a similar patent infringement case to Verizon (they are still appealing that multi million dollar verdict against them). The news just can't be good for them and their long term survival.

Their stock price fell by 33% today on the news of this loss (started at $1.99 per share and ended at $1.20 per share). If Vonage is forced to pay either of these amounts, the company will no doubt have to file for bankruptcy protection.

Will SunRocket's Closure Mean More Business for Us?

The VOIP world, which has been gaining lots of popularity due to Vonage's huge marketing spend, has experienced a huge blow this past week with SunRocket closing it's doors. The potential set back this had for the industry as a whole had so many of the major players worried, including Net2Phone and ViaTalk, that they rushed out and offered to pick up many of the remaining months of service for these customers free of charge.

SunRocket had about 200,000 customers at the time of it's closure, most of whom were locked into long 1 or 2 year contracts. What hurt the most was the fact that the customers had prepaid for their years of service and in the end were left holding the bag. Add this to the fact that Vonage is on shaky ground with the impending punitive patent infringement lawsuit from Verizon, and you have an industry whose future does not look so great.

For those of us in the prepaid calling card market can we look at this like one man's failure is another man's gain? It is still unsure how much these VOIP services contributed to the downturn in the phone card business in the first place, but it would be hard to believe that they did not at least play some small part in taking customers away. But before you go thinking that the business will go back to where it was, think about it long and hard. Some will come back but unfortunately it will most likely not be too many!

There are still so many other attractive long distance services gaining momentum like: prepaid mobile phones, Free PC to PC clients (Skype), Callback, Unlimited calling plans from traditional PTTs and many others. With all of these companies chasing the same pie, it is doubtful that prepaid phone cards can regain much. We are just an older out dated model whose only play left is with lower pricing and appealing to the credit challenged and recent immigrant markets (a group that is also becoming more savvy to the other alternatives).

Don't get me wrong... I am not saying prepaid phone cards are going to disappear tomorrow, it's just that this impending hardship in the VOIP industry is not going to mean many more sales for us!

Attention Wal-Mart Shoppers

VOIP is going mainstream with a recent announcement that about half the Wal-Mart stores in the USA will now be carrying Skype on it's shelves. Most stores will be carrying $20 prepaid Skype Out cards, while some others will also be carrying bundled Skype packages, including 3 months of the unlimited service along with a headset and/or video cam.

Roughly 10% of landline phone service in this country comes from VOIP services but now with Wal-Mart, the retailing power house, VOIP is sure to get more of that market share.

So why not head on over to Wal-Mart and pick up some deodorant, milk, shoes and a Skype prepaid card.

Vonage... Please Just Go Away!

Last week Vonage managed to get a stay on the order requiring them to stop signing up new customers until their appeal is heard and Vonage, fearing for it's life, has started a campaign called "Free to Compete" (http://www.freetocompete.com/) that is urging it's customers and supporters to fight the "wrongful" tactic of Verizon to shut them down. The claim, in short, is that Verizon doesn't like Vonage because they are offering competitive rates which lure their customers away and that Verizon likes to rip people off...

While I do like lower prices, I have to admit that Vonage's long term plan on making money is non existent and even without the lawsuit, I think Vonage would have been out of business within 5 years anyways. Their cost per acquisition is just way too high and they are not physically responsible for paying for the wires that supply our homes with Telephone and Internet, both services that Vonage could not exist without.

Your Cable provider and Verizon, have to charge higher rates because they are responsible for providing and maintaining these wires into your neighbourhoods and houses. It is for this reason why you have to pay more... Verizon has to pay for the infrastructure and they don't charge the higher rates because they want to be greedy pigs but because they have to!

There is no doubt that Verizon maybe a little greedier than they should be and that competition will benefit the end user, I just don't feel like Vonage's business model and pricing should be allowed considering all of the issues above.

What is the Future of Prepaid Phone Cards?

While most of us will no doubt agree the prepaid phone card boom is well behind us, but the real question now is what kind of future does the prepaid card business hold?

The answer, seems to be clear by the fact that the once powerful companies, like UTA and STI are just not doing well. Sales of prepaid cards are at an all time low and I think the market was just so badly managed and abused that the customers are more willing to try other methods of long distance calling, like with prepaid cellular phone, VOIP services (Skype/Vonage) as well as traditional long distance.

The idea that the average prepaid phone card customer is credit challenged and prefers cash business is changing and more and more immigrants are either becoming more credit enabled or now have the means, through prepaid cash cards and other debit systems, to buy more mainstream services.

Immigrant consumers are more educated and technology savvy than they were 5 years ago and the rates that Ma Bell and VOIP players are offering today are so low that it is almost no wonder why a lot of people are turning away from phone cards.

What do you think?

Skype Goes to Retail Outlets!

I just read that Skype has struck a deal with Radio Shack to sell starter kits at their some 3,000 odd retail locations though-out the US. This makes sense as most of Skypes popularity came from overseas users and now in order to become profitable they need to get the big spending US market. The Kit that Radio Shck will sell comes with the software on CD, headphones, and 30 minutes of PC-to-Phone call time. Not sure of how much it will cost but it probably won't be more than $20 bucks.

I have to be honest I don't think it will sell that much but any sales this can produce is a plus for Skype who has yet to gain widespread acceptance in the United States.

Net2Phone tries this years back with the Yap Phones at Comp USA and that didn't do too well. I wish them luck but I would still recommend keeping their sales efforts online and considering they are now owned bye the powerhouse Ebay, I think new US customer acquisition should not be much of a challenge any more!

NetworkIP Prepaid VoIP Phone Service Targets International Distributors

NetworkIP has announced it will launch a prepaid Voice-Over-Internet Protocol (VoIP) telephone service for overseas consumers and businesses needing a local US-based phone number accessible from anywhere in the world. NetworkIP's Prepaid Broadband Phone Service will initially feature telephone numbers from rate centers across the United States with coverage expanding globally in the near future. Additionally, customers will have real-time access to account management features giving them the ability to monitor call history and account balance as well as recharge the account when funds are low. NetworkIP has also certified several industry leading hardware devices as being compatible with the product. "NetworkIP's Broadband Phone Service will enable prepaid distributors and resellers to tap into the exploding international VoIP marketplace," said Pete Pattullo, NetworkIP CEO and President. "This service underscores our commitment to deliver the most comprehensive prepaid and stored value products and services and the best connections for our customers." Available through prepaid resellers, NetworkIP Broadband Phone Service will be distributed, initially, in targeted Asian, European and South American cities.