Phone Card Commercial - Week 19

Commercial for a Web based calling card called Calldirect.

Disney Mobile to Shut Down at the End of the Year

The Walt Disney Company announced recently that it would be suspending service on it's fledgling MVNO, Disney Mobile, effective December 31st, 2007. The brand, which was created in 2006 and was targeted towards parents of young children (safe phone that could be monitored and had GPS to track their children), just could not get up to speed fast enough in order to keep pace.

The company's lackluster sales and poor distribution are cited as the main reasons for the closure. They acknowledge that without an extensive brand building campaign they would not achieve the level of success needed to produce competitive numbers. They also claim that spending the money, while possible, would probably not be worth while in such a competitive marketplace.

The brand name and child friendly content was just not enough to compete with companies like Verizon and Sprint who were also heavily pushing kid friendly phones and were willing to spend the money to get the word out!

Truth be told it really does not look like their is much room for many MVNOs in the marketplace and the future does not look better, unless of course your company name is Virgin Mobile!

Disney Mobile runs over the Sprint network.

Phone Card Commercial - Week 18

Again not exactly a commercial but it is an interesting marketing bit put together for Blackstone and their POSA business... warning this piece is about 5 minutes long!

Jury Issues $156 million Dollar Judgement Against At&t Over Prepaid Calling Cards

A federal jury recently ruled in favor of Dallas based TGIP Inc. on their claim that At&t had used two of their patents that allowed the company to deliver point of sale activation for some of their prepaid calling cards. The lawsuit was originally filed back in March of 2006 and named At&t as well as Verizon, MCI and IDT. The later three companies settled out of court but At&t fought it all the way.

The $156 million dollar award was determined by a 4% royalty on At&ts 3.5 billion in calling card sales during the time frame in question.

While At&t is going to appeal the verdict, it seems as if this company has set the proper precedent in court to lay claim to most of the POSA technology in the market today. I guess it's the only company that actually managed to make money off POSA ;)

Ibasis and KPN Are Now One Company

Ibasis just recently announced that they have merged with Royal KPN N.V., the national carrier of the Netherlands, and that they will be taking over control of KPN's international carrier services unit in addition to receiving 55 million dollars in exchange for 40 million shares of Ibasis common stock (giving KPN a 51% stake in Ibasis).

This deal seems like an effort for KPN to outsource it's international termination infrastructure and maintenance to a more cost effective and efficient VOIP company without having to reinvent their existing TDM network.

This deal single handily moves Ibasis into the top three international carriers in the world and should lock up their position as the strongest VOIP carrier in the market today. Ibasis which has been around since 1996 is also a leading provider of prepaid calling cards here in the US.

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Where Have All of the Prepaid Phone Card Customers Gone?

In this article on the prepaid phone card business, the first in a series of postings regarding the overall business and it's forcasts, we look at some of the main reasons why the phone card market has been shrinking at such an alarming rate.

1) Prepaid Wireless

For years most immigrants, had no way of getting their own phone service due to poor credit so they resorted to using phone cards from payphones to make all of their calls. Now with prepaid cellular becoming so popular (close to 40 million subscribers today), these immigrants and credit challenged people now have more convenient options for making phone calls. To date international calling still remains expensive on these prepaid cell phones but with each passing year we see more and more companies starting to lower their rates to international locations to help increase their revenues and market share numbers.

2) VOIP

Thanks to companies like Vonage, Packet 8, Skype and others, who had no interest in being profitable, home phone service and international rates were brought down to insanely low amounts that consumers would have to be foolish not to try! The good news is that with many companies in this industry going belly up or running up against financial hardships, many consumers have lost faith in this brand of calling and are looking elsewhere for solutions. The problem here is that many are not looking to phone cards as the answer!

3) Cable Companies

While technically classified as VOIP, they deserve separate mention as unlike the other VOIP players, their strategy is to make money. Their pricing is a little higher but they offer good bundling packages that makes overall monthly expenses lower, at least for the first year. By marketing to their existing base they are having tremendous success in driving up their revenues and giving the traditional LD companies a major headache!

4) Traditional LD Providers

Traditional long distance providers like At&t, Verizon, Quest and others were extremely reluctant to give up their fat cat margins but faced with declining customer bases (mostly thanks to cable companies) they have been reluctantly coming around. Today you can find many providers with unlimited international calling plans and deep discounted bucket plans. One thing to note here is that they are not actively marketing or pushing these plans but instead using them as retention tools... no need to pillage a profitable base!

All in all prepaid wireless and wireless in general is probably having the biggest impact on the calling card market and most likely will continue to be the biggest influencer in the future.

Next week I will touch on the prepaid wireless business in a little more detail!

Montel Williams Teams Up with CallingCards.com

In one of the first celebrity endorsements I have seen in the phone card business in a while (dating back to the Bollywood days), Montel Williams has created a partnership with callingcards.com to promote free calling card giveaways.

While not a high level celebrity, it should give them some good buzz and a little more website traffic!

Check out the site here....

Phone Card Commercial - Week 17

While not exactly a phone card commercial, this is a marketing piece that Nobel put together to help sell thri services. A little long but because they are a major player in the phone card business I thought they were deserving for this spot!

Intelecard Website Sucks!

Pardon the blunt title but this just has to be said... the Intelecard website used to be a great place to read some insightful articles and get business listings but if you go there today it looks like my 4 year old nephew is designing the thing! All of the images are out of whack, half the pages say under construction, and those pages that aren't under construction have about 3 words of text.

My guess is that business is not so good for them and they had to cut back on areas that are not producing enough revenue and the web is definitely one of those areas. They most likely got rid of their web designer and have someone internal doing it with little knowledge and abilities.

It's a real shame!

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.

Women Fights Verizon Over Charges and Wins!

A women of Indian decent living in Florida was very surprised one day when she received a bill from Verizon for $590 for calls to India, Colorado and New Jersey. For the two years she has been living in the US, she has been using one particular calling card ("Mother India") to make all of her long distance calls. Verizon claims she absolutely made these calls but she fought back and said she didn't use them and there was no way she could make a mistake since she had been using the same access number for two years. Plus the woman says the Colorado and New Jersey calls prove this bill is false since they don't know anyone in those states.

She made many calls to Verzion customer service but go nowhere until she finally contacted a media outlet in south Florida. As soon as the media outlet contacted them they credited her account for those disputed calls.

Not saying this women is lying but having been in this business for a while, I can't tell you how many times I heard people calling into the calling card customer service department saying that their local phone company charged them for calls they made using our phone card. But 9 out of 10 times it is usually due to user error, forgetting to dial the access number and just dialing directly. It is possible that Verizon made a mistake but more possible that she made a mistake.

The full news story can be viewed at http://www.tampabays10.com/news/local/article.aspx?storyid=63720

Phone Card Commercial - Week 16

A well done foereign commercial for phone cards.

Barron's Articles Put IDTs Future in a Bad Light!

Most of us have been well aware of IDTs recent hardships as made evident through their last few quarters of poor performance but a recent Barron's article paints a desperate picture for IDTs future.

In a series of two articles this month, "A Troubled Telecom Falls Further" and "Bad Signals" Barrons has really painted a bleak picture of IDTs future. The basic premise is that while IDT has been saved by it's large cash reserve in recent years, it looks as if IDT will need to keep using that cash reserve. So much so that Barrons predicts it will run out of cash in as little as two years. It even hints that the executives are most likely not too confident in the companies future since they seem to be selling off their shares at a much more regular interval.

The articles aren't scathing and put most of the blame for IDTs problems on the rise in wireless and VOIP as the popular long distance calling methods. It also points to IDTs huge losses from its purchase of Winstar, a transaction for which they are now suing over based on false promises and bad information.

While this information should come as nothing new to industry insiders, it does place a heavy wake up call to the real future of a once dominant telecom company.

Nobel Expands It's Online Calling Card Business Into the UK

As an online calling card retailer myself, I have to say I am envious of Nobel for their recent announcement of an expansion into the UK online calling card market. Next to the US, this is probably the next biggest calling card market in the world.

Nobel will be launching the web site Nobelcom.co.uk in the coming weeks and they should have no problem replicating their US success even though the UK market is fairly well saturated. In their business it's all about online advertising and implementing a strong organic search engine strategy as well as a sound PPC campaign.

With the calling card market getting more competitive here in the US, a lot of people have turned to other products and services, like prepaid mobile, voip services and prepaid cash cards to make up for the lost phone card revenue but in my mind going outside of the US is probably the best way to expand and/or keep your business growing. Some other markets of interest for phone cards are: Canada, Australia, Italy, Belgium, France, Spain, Portugal and Germany.

Phone Card Commercial - Week 15

A strange but different commercial for the Homies phone card.

The Decline of the Pay Phone Industry

When I first started in Telecom back in the 1990s I remember when a large percentage of phone card calls were made via local pay phones but with the rise in cellular phone and the ease of acquiring one, came the demise of the pay phone industry.

According to the FCC website there were over 2 million pay phones throughout the US. Now, 10 years later, that number is half of what it once was, with a little over 1 million total pay phones still in existence. The number of calls made has also decreased dramatically from over 2.5 billion in 1997 to around 1.7 billion.

While you will still find many Mexicans and other recent immigrant groups waiting on the corner pay phones because they don't have the credit ability to qualify for a home or cellular phone, I think that with rise in popularity of prepaid mobile, many of these loyal pay phone users will switch to prepaid cell phones for all of their calling needs, leaving the pay phone operators in a much worse situation than they are in now!

One thing worth noting is that much of the decline in pay phones comes from the private pay phone operator sector with the public companies like AT&T and Verizon only making up for a smaller percentage of the decline. Today private pay phone operators make up exactly half of overall pay phones on the street.

Adult Film Company Vivid Entertainment Gets Into Prepaid

This summary is not available. Please click here to view the post.

Phone Card Commercial - Week 14

A Spansih language phone card commercial.

IDT Appoints New CFO

Only 5 months after IDT appointed Stephen Brown as the CFO, they have a change in that position yet again. Marc J. Oppenheimer is the new CFO and will be responsible for turning the wayward ship around. Former CFO Brown will continue to serve in some role in the company but obviously a huge demotion for him and most likely a reflection of the companies disatisfaction.

Oppenheimer has been a board member of IDT for several years and should intergrate smoothly into this position as a result.