US Considering Bill Requiring Identification for Prepaid Cell Phone Purchases

There is some discussion going on at the Federal and State levels about the issue of requiring identification for the purchase of prepaid cell phones. Up until now individuals could walk into any outlet and buy a prepaid cell phone with complete anonymity, a big selling point for this type of service. However, this same anonymity also causes the phones to be popular with drug dealers, terrorists, and illegal immigrants. Many retailers have begun to restrict the number of phones that can be bought at one time to help curb illegal uses but there is no law requiring this to be done.

Senator John Carona from Texas is leading the charge in trying to require government issued ID to be shown and recorded by retailers in order to purchase prepaid mobile phones. He is also proposing to make it law that no more than 3 phones can be bought at one time. These laws, in his opinion, will help curtail criminals from using these phones.

As you can imagine prepaid cellular phone companies like Virgin Mobile USA are fighting hard against this, citing the fact that they have always worked closely with law enforcement to provide the necessary info to help fight back against these criminals. Prepaid cell phone companies state that the bulk of their users are law abiding citizens who value the level of anonymity and privacy that these phones offer. So why should we penalize the majority for what the minority do?

Another major objection to the laws comes from the cost associated with having to gather and store each and every users personal info. Retailers would have to enter in data to the providers database with every sale and providers would have to spend millions to build and maintain this database. The cost would ultimately have to be passed along to the consumer by paying higher prices for the service.

Even if this bill never sees the light in the Federal governement, many states like Michigan, New Jersey and others are considering their own bills to combat the criminal usage patterns.

Read the full article here

Texas Attorney General Goes After Calling Card Company

Texas now joins the list of local government agencies that are cracking down on the "fraudulent" activities of some calling card companies, joining Florida, New York and New Jersey. Texas Attorney General Greg Abbott filed a complaint in Bexar county alleging that Houston based Next-G Communication, Inc. makes and knowingly distributes calling cards that do not deliver the advertised number of minutes to it's consumers.

State investigators tested the cards themselves and found that in just about every instance the phone cards failed to deliver the number of advertised minutes advertised on their point of sale posters! Most of the cards tested delivered only about 40% of the advertised minutes (the official state report)

The attorney General is seeking an injunction against these practices and is also seeking to levy a $20,000 fine.

Read the Full Story here and here

Epana Calling Card Users to Get Discounts on Prescription Drugs!

In a press release Friday, Epana Networks announced that it would be providing a new loyalty program with the cooperation of HealthTrans Inc. , to provide pharmacy discounts to loyal customers of their prepaid calling cards. The program is mainly aimed at US Hispanics who are on average uninsured and would benefit tremendously from a program like this! The program is being tested for now in cities like: Atlanta, Chicago, Las Vegas and Reno (all areas selected for their high concentrations of uninsured Hispanics) and will eventualy be rolled out in other areas as well.

The end users will enroll for free in Club Bienestar and when they make a purchase of the Mi Carnal phone card they will receive points to their HealthTrans pharmacy discounts. The discounts will average 16% on brand drugs and 55% on generic drugs; though discounts can range up to as high as 70%. Even non calling card users can register and receive base discounts through the Club Bienestar website.

Read the full press release on the Epana Club Bienestar program

Robbery Suspects Caught Trying Buy Phone Cards With Stolen Credit Card

A Chinese foreign exchange student was robbed last week in Worcester Massachusetts by two teenage boys, taking his cash and his credit card. The thieves ran off and later tried to buy some phone cards and cigarettes in a nearby Walgreens. The store clerk refused the purchase saying they did not accept payment for phone cards by credit card and the two individuals left but the store, suspecting fraudulent activity, reported the incident to the police. With the help of the surveillance camera video from the Walgreens, police were able to identify the two individuals and apprehend them not to much later.

Well at least it's good to hear a story about phone card fraud and it not being aimed at the phone card providers or distributors!

Full Story

STI Dallas Calling Card Commercial

Here is a Spanish lLanguage commercial for STI phone cards in the Dallas area.

Suffering Through The Month of May!!!

I can't wait for May and June to be over, as these have been and still are the weakest sales months for me! I know this is not unique to my business as many of my friends have the same complaints. Prepaid mobile saves me a little bit as this part of my business seems to remain steady all year long but phone card sales, which make up for most of my revenue, really takes a nose dive.

With the downtime I have been adding some new products into the mix , like prepaid cash cards (low demand and low profit margin), prepaid home phone service (just acting as an agent), and also picked up one international mobile top up product which I plan to introduce in the coming months. Hopefully some of these new products help counter my consistent decline in prepaid phone card sales.

This business is getting tough and you just need to hustle a lot more to survive but if you keep innovating and moving I believe you can survive and prosper.

Adult Entertainment Prepaid Cards

Looking for another product to add to your prepaid mix? How about selling Adult Entertainment prepaid cards along-side your prepaid phone cards and prepaid mobile phones?

Web Wise is a company offering prepaid adult access cards that allows users to prepay for their online porn by buying a card at their local prepaid retailer (I don't think too many retailers carry this one). They claim that it provides a level of anonymity that credit card payments do not and also boast the fact that there is no need to worry about some sleazy porn site misusing your credit card info.

While the idea may seem like a joke, the adult entertainment industry is multi-billion dollar a year business and this product is sure to get some interest... it will be controversial but will still get interest nonetheless!

You can even buy these cards on ebay!

First Conviction in Prepaid Mobile Phone Trafficking!

The practice of illegal handset trafficking has long been a thorn in most Prepaid cellular phone companies side but as of yesterday Virgin Mobile managed to get the first conviction of an individual involved in this type of practice. Muhammad Mubashir of Texas was convicted in the Texas courts of being in criminal contempt for attempting to export mobile phones to China in violation of an injunction entered against him by the U.S. District Court of the Southern District of Texas in a civil case brought by Virgin Mobile USA. L.L.C.

The handsets, which are usually sold at a loss in order to acquire customers, are bought by the traffickers and then not used with the service but shipped overseas to be sold as a low cost mobile phone to be used with the local carriers. As a result prepaid mobile companies like Virgin Mobile and TracFone, expecting to generate the minute revenue to make up for the hardware loss, have experienced poor huge financial losses instead.

On May 9 last year, an Immigration and Customs agent and a Border Protection officer examined a shipment at Eagle Global Logistics being exported by a company owned by Mubashir, Americas Wireless, to Yeng Fung Trading Company in Hong Kong. The shipment contained 46 Virgin Mobile cellphones, all made by Nokia (model 2115i), that displayed the Virgin Mobile name and logo. An injunction was issued to prevent him from continuing the process but he choose to disobey that injunction and kept up the practice which resulted in his conviction on contempt charges.

View the full story here

Nuevo DMV Calling Card Commercial

Here is a cheesy Spanish language phone card commercial for the Nuevo DMV calling card by STI.

IDT Global Service - "break even by July, (or) it will be closed down"

According to the site seekingalpha.com, IDT global Services, IDT Corporations Israel based call center company has been given a mandate to either start breaking even by July or the division will be closed down.

Once over 900 employees strong, the division is now estimated to be down to around 700 employees and will likely see further cuts in the coming months. The company which handles outsourced call center solutions for US and other international companies, has been struggling, like it's parent company, to keep the business rolling in and is now at a crossroads...get going or get gone! Beyond staff reductions some of the other things the company is trying to do to become profitable is: rent out their other call center in Beer Sheva and Safed, getting rid of paid lunch breaks for employees, lowering salary levels, and increasing sales agents target levels.

IDT Global Services CEO Eli Ninio is rumored to have purchased a bulk of the ownership of the Israeli operations from the parent company.

Virgin Mobile, USA and SK Telecom - Possible Merger

Virgin Mobile, USA announced on Wednesday that they are talking with SK Telecom about a possible merger or business relationship in the US MVNO market place. Virgin Mobile is one of the largest MVNOs with just over 5 million subscriber in the US and SK Telecom, Korea's largest mobile provider, has a US product on the Sprint network (same as Virgin) called Helio and has about 200,000 subs in the US. Both companies declined to comment on any of the details of their discussions, only stating that they are talking.

Helio Mobile was formed a few years back with Earthlink in an attempt to try and gain a share of the US prepaid mobile marketplace, but has been loosing considerable amounts of money on this venture almost since the start and they just have not been able to grow the subscriber base enough. The guess is that SK Telecom is looking for a way out of this money looser and Virgin seems to needs the subscriber growth... so the marriage seems to make sense. The logical step, should this deal go through, is that the Helio brand would disappear and everything would be transitioned over to the Virgin Mobile product line. Since they are both using the Sprint network then the transition should be easy and relatively painless for both Virgin and Helio customers.

Shares of Virgin Mobile, USA shot up almost 43% as a result of this announcement!

Termination Rates to Pakistan Rise by 100%

In one of the largest rate increases in recent months, the termination rate to Pakistan has doubled from around 5 cents per minute to just above 10 cents per minute and the rate is expected to climb even more. The move is a result of the Pakistani government (PTA) making changes to help local Pakistani Telco companies be more competitive and profitable in the recently deregulated market as well as reduce "grey market" activity. The increased costs will also help Pakistani Telco's pay for long term improvements and updating of the countries telecommunications backbone.

Many companies have yet to adjust their rates on their international calling cards and their are still deals to be had but this should not last long as more and more companies take action to increase the rates to keep up with costs.

For more details see this online article

Commercial TV La Leyenda Lady in Distress

Here is another Spanish language commercial for the La Leyenda phone card by IDT.

Employee Steals Over $450,000 from Coinstar Machines

Here is an interesting story...

An employee of Coinstar, the popular grocery store coin counting machine that allows you to turn your change into cash (or the option of buying gift cards and phone cards), was recently arrested for having stolen over $450,000 from Coinstar machines throughout Washington State.

Michael Burns, 39, worked at one of the companies warehouses re-manufacturing machines and therefore had intimate knowledge of how to bypass the security features. Even though he was not an authorized field worker, that did not stop him from dawning a Coinstar uniform and visiting over 14 stores to pretend like he was servicing the machines.

Coinstar contacted police when they noticed $17,500 missing from one machine and the search led to Mr. Burns. When found, Burns had over $130,000 of cash, high priced electronics, a 2007 GMC Denali, a brand new 2008 Harley Davidson motorcycle, and more paper trails of other monies all in his home.

Burns is currently being held on charges of first degree theft.

Don't worry... he didn't steal any phone cards :)

Meijer Supercenter Partners with Fusion on Prepaid Mobile Offering

Meijer, who operates 181 supercenter stores throughout Michigan, Ohio, Indiana, Illinois and Kentucky, has announced that is has partnered with Fusion Mobile, an Austin Texas company to provide a private label MVNO product to be sold exclusisevy in all of their stores.

The product is called Meijer Mobile and has it's backbone provided by Sprint PCS. The phones will be completly prepaid and will include the usual no credit checks and no contracts but will also include a few attractive freebies like unlimited nights and weekend minutes, domestic long distance, cheap text messaging, voicemail, caller ID, and three-way calling. Some of the other benefits will include web access for only $0.20 a day, $0.10 text messages and cheap calls to Mexico (only $0.025 per minute).

Currently they are offering hardware from LG and Samsung which includes the LG 125 for $69.99, the LG 150 for $99.99 and the Samsung M300 for $129.99.

The phones are available now for purchase in stores or online.

IDT Global Reduces Workforce In Israel

It was reported last week that IDT Global Services, a division of IDT Corporation, is believed to have laid off roughly 150 employees from it's call centers in Jerusalem, Tel Aviv and Be'er Sheva Israel. The cuts are rumored to have happened as a result of IDTs poor financial situation and the rumored sale by Howard Jonas of this division. IDT is one of the largest employers of English speaking people in Israel and this layoff will make it tough for those Eenglish only individuals living in that country as there are not many jobs for those that don't speak Hebrew. According to reports most of the individuals laid off were on the management and administration side.

This marks a huge change in the Howard Jonas's philosophy which has always prided itself on being a contribution to the Isareal economy and it's job market. However, with such hard financial times being faced by IDT, they have no choice but to consolidate operations in order to curb their bleeding. No doubt this will not be the last we hear about workforce reductions for this company with others sure to follow.

Report

Commercial for the Geo Phone Card

Here is a commercial for the Geo Phone Card, a pinless phone card with good rates to India, Pakistan and Bangladesh. Believe it or not this commercial is not in Spanish!

One Of The Reason Why The FTC Has Targeted CTA?

Just from having searched the Internet I think I can see why why Clifton Telecard Alliance is being singled out by the Federal Trade Commission. I did a search on Google on CTA and I came across a bunch of sites with complaints about their cards:

Complaint #1 - African Dream Card

Complaint #2 - Hello Africa Card

2007 Court Case Against Clifton Telecard Alliance for Fraud

Better Business Bureau has 36 Complaints filed in last 36 months - They have the BBBs lowest rating

Just to be fair, a search on many calling card distributors and providers would probably yield similar amounts of complaints, but it sure didn't help CTA's cause here... It probably gave more fuel to the fire.

CTA is going to have a lot of work ahead of them fin the coming months fighting off the federal government and if other companies don't clean up their act and fast the government might be after them soon as well.

Here is a link to the FTC complaint against CTA

Ibasis Q1 2008 Earnings Call

Ibasis conducted their Q1 2008 earnings call on Monday and the news was not good. Their stock tumbled almost $1 on the news of the poorer than expected results. They posted a loss of $2.1 million, or 3 cents per share, on sales of $324.9 million dollars.

As for their retail calling card business here is how Ofer Gneezy addressed the topic:

"The retail prepaid calling card market was hampered this quarter by the general softness in the US economy and other factors affecting the employment of migrant workers, a demographic that the accounts for a significant portion of prepaid calling card usage. This factors in the continued effect of the industry transition to more transparent pricing combined to put pressure on our retail business in the quarter. Along with other major providers in the calling card industry, iBasis is playing a leadership role in the creation of an independent association of prepaid calling card providers that will establish standards of ethical business practices and monitor the industry and effectively certify vendor services. We believe this trend is very positive for consumers of prepaid calling products and for iBasis, as we have a significant advantage in our network in low cost of operations. In the mean time, we continue to work with high integrity distributors and market quality products that create value in the iBasis brand."

Sounds like a chapter taken right out of IDT's earnings call to explain the poor performance of the calling card business. Why can't these guys just come right out and say it that the phone card buisiness is not and will not be what it used to be! At least they could help manage investors excpectations. The quote above is from the full earning call transcript which can be viewed at Seeking Alpha.

Media Attention Towards Shady Minute Calling Card Industry Continues

With each new day comes more media attention towards the crooked practices in the calling card industry. In the last month alone I have seen dozens of articles from major publications focusing on this topic:

USA Today - Shortchanging phone cards probed

Los Angeles Time - Watching for scams on prepaid calling cards

Orlando Sentenial - Users may come up short with low-cost phone calling cards

Columbus Dispatch - FTC cracks down on misleading phone cards

Arizona Star - Prepaid-phone-card-fraud is rampant

and many more!

What surprises me is that it hasn't seemed to change the way the phone card operators are doing business! You would think that with this press coverage and the IDT lawsuit, this business would take a stand and finally clean itself up for good! However, most of these guys seem to be stuck in a time warp and keep conducting business like it was 1999! The winner in this game is going to be the company that puts it's money where it's mouth is and cleans up their cards and conducts a strong marketing push to educate the consumers that their product is clean and delivers the minutes and quality advertised.

The market is shrinking and it is going to take some smart, consumer friendly company to come out of the mold and take a stand!

Commercial IDT La Leyenda Phone Card

This is a good Spanish language commercial for the IDT LA Leyenda phone card. A little higher production value than most of the other prepaid phone card commercials.

Spring 2008 Intelecard Expo - Post Show Review!

Ok so the Intelecard Expo in Edison NJ has just about wrapped up and I have to say this was probably one of the worst prepaid shows I have ever gone to in my life! For starters the show was way off the beaten path in the middle of an industrial park.... I got lost trying to find this place! Once I finally did get there it got a whole lot worse.

I didn't see too many cars in the parking lot, which should have tipped me off, but when I got in I think there was about 50 people there at the maximum and the show had already been open for an hour. Most of those 50 people were booth staffers and they were just going back an forth talking to each other. What made matters worse was the show looked like it was done in a garage. There was no carpeting in the iles and the were only 27 booths scattered over 4 rows. I have seen Church Bazaars bigger than this thing! I felt so bad for the Intelecard show staffers and the booth staffers, they looked bored out of their minds! I went and talked to a few of them just to help them pass the time (I posted a picture here to the left of the outside of the NJ convention center where this show was held).

CTA and Simple2Call had the biggest booths (20 x 30) and Raza had a fairly big booth (10 x 20) right at the entrance. Other booths there at the show included ones from Cell Gate USA, Direct Wholesale, Emida, Futura Card Services, NACT, Nexus Wireless, N-Soft, Pulsar Communications Inc., SK3, STX Communications LLC, Telispire, Via One Technologies Inc, WCGS and a few others. If you ask me these companies should ask for some money back! No real big providers were exhibiting there but Ibasis had there very own meeting room and seemed to be making the most of the show and I also saw a few IDT and Locus guys roaming around. I hope it was a little more well attended on the first day of the show than it was on the second (The picture to the right here is as you walk into the hall and the Raza booth is straight ahead).

It saddens me to see Intelecard this way and I hate to say this is probably one of their last shows judging based on this poor performance. It's not all there fault, the industry has shrunk big time and to top it off they now have competition from the Prepaid Press. I think the lesson learned here is there is only room in today's market for one show a year and I think that honor is going to now be owned by the Prepaid Press Expo in Vegas.

Well that's it for my review of the show and farewell from beautiful Edison NJ!

New Jersey Spring Intelecard Expo 2008 Begins

Well today marks the first day of the very first Intelecard expo ever in Edison New Jersey! Today is just for registration and some conference sessions but on Wednesday the exhibit hall opens and the fun will start. I know I have been making fun of the Intelecard expo a lot lately but in reality I look forward to the opportunity to get together with other industry folks and catch up. It's also a great time to get some one on one time with some key players and get some good traction going on future business ventures. It can take weeks if not months to get a deal going over the phone and email but in person we can often get things done in one or two sittings!

I won't be there at the expo myself until Thursday and I will be sure to report back for those of you that won't be able to make it. Maybe I will even include some pictures :)

Look forward to seeing you all there!

The Ludicrous Executive Payouts Continue at IDT

For a company that is just bleeding money, IDT sure does like to keep those big pay days going for senior management. In a disclosure notice today, IDT announced that they had given CEO Jim Courter a cash bonus of $372,000 and 93,234 shares of restricted stock (valued at $372,000). They also gave the Telecom Chief Operating Officer Yona Katz a contract extension until September of 2008 in which he will be paid $125,000 a MONTH with a bonus to be awarded in July for $155,280. Katz also has a clause in his contract which states should he be terminated between now December 2009 he is entitled to a severance payout of $2,177,023.

So if you get your calculators out, and you better have one that can sum up that high, IDT has just committed to paying out more than 1.5 million dollars this year to two people! This is just plain obscene! Are 2 people who have been running a sinking ship really worth that much money? If the company was doing well, I would think that this amount is fine, but for a company who has been nose diving quarter after quarter, this is just plain wrong!

Oh yeah I forgot to mention that they paid out some smaller bonuses as well to some of those other exec's! You can read the whole sickening report at this link!

Blackstone to Distribute Best Mexico Phone Cards

Viscom International Inc. has been pushing the Best Mexico card series a lot lately and this week just announced that they have agreed to a deal with Blackstone Calling Cards to distribute this growing brand through the 5,000+ Touch-n-Buy terminals throughout the US.

Blackstone's Touch-n-Buy terminals are touch screen terminals that sit on a counter top and allow consumers to select from over 100 different prepaid phone cards, cash cards and mobile cards. Once the customer chooses the product they want their pin number is printed out by the cashier and payment is made.

Viscom, founded in 2001 has been gaining some traction lately with the Hispanic market and has been advertising their product very heavily, especially in the South East. On their website http://www.viscominternational.com/ they claim to have processed to date over 130,000,000 calls to Mexico and have sold over 33,000,000 cards. In 2007 Viscom was named to INC magazines 5000 fastest growing companies.

Here is a link to the offical press release

Commercial for the On Demand Phone Card

This is a Spanish language phone card commercial for the DMV On Demand phone card distributed by Hi-Tel. Very low budget quality commercial but on par with many other commercials we see for phone cards.

Virgin Mobile USA Rumored to be Cutting 100Jobs

In more bad news for the prepaid business Virgin Mobile USA is rumored to be considering cutting roughly 100 of it's 400 total personnel. The 1/4 of total work force reduction is mostly due to poor performance in it's last few quarters and a shift in the companies strategies to outsource more of it's operations to outside parties.

Virgin is still denying that any final decision has been made and is continuing to review it's overall business strategy.

You can read the full article here

Questions That Will Be Asked Next Week at the InteleCard Expo!

Trade shows are always fun in the prepaid phone card business! It's not uncommon for fights to break out and heated arguments to erupt and the upcoming InteleCard trade show next week in New Jersey is sure to keep up with the tradition.

With all of the news lately here is some of the hot questions and topics I think will be discussed:

1) Has the Federal Trade Commision come knocking on your door yet?

2) What did CTA do to be singled out by the FTC?

3) Have all the carriers listed in the IDT lawsuit really cleaned up all of their cards?

4) Is there anyone out there in the market that can provide me with a card with $1.99 connect fee, a $0.99 disconnect fee and a $0.10 per minute just because fee.

5) How come Intelecard sucks so much... I have read menus with more content than their magazines...

6) Why are we having a trade show for phone cards in Edison NJ? Is Tony Saprano going to be here?

7) Anyone here want to buy Ibasis stock real cheap?

8) Which one of the companies diplaying here will be gone before the end of the year?

9) What the hell am I doing here!

Q Phone Card Commercial

Here is a Spanish language phone card commercial for the Q Phone Card by STI.

New Unlimited Phone Card Will Shake Up Industry!

Europhone USA, an MVNO, phone card distributor and authorized Verizon Fios dealer based out of Port Chester NY, announced yesterday that they plan to introduce an unlimited prepaid phone card to the US market. The card will be available in a $5 version which will give a weeks worth of unlimited calling, and a $20 card which will deliver a months worth of unlimited calling. It averages out to a cost to the consumer of about $0.72 a day.

The card will include unlimited calling to about 40 destinations worldwide but unfortunately I could not find any details yet of what those countries are from either the press release or their website http://www.europhoneusa.com/.

Depending on the countries that are included this card is sure to disrupt the prepaid calling card market in the USA by continuing to devalue the cost of long distance calls. Unlimited phone cards have been tried before and most have failed and I doubt the provider here will be able to sustain this one for long but nevertheless the damage to the overall industry will be felt by this. Hey I am all for giving the consumer a good deal but not when it means that you loose money in doing so!

You can read the full press release from Europhone USA here

Hispanic Demographics and Phone Service

In an interesting article on Meidapost's Marketing Daily web site called "Telecom Pushing Harder Than Ever Within Hispanic Market" the demographics of the Hispanic marketplace in the US are well laid out and help explain why more and more are moving away from phone cards and more to other telecom solutions.

In short order the Hispanic marketplace in the US is spending about 27.3 billion on phone services (17% of the total market) and is expected to rise to about 42.2 billion by 2012. Also noted is that about 65% of Hispanics now have cell phones.

Of note in this article is also that the Hispanic population is also more youth oriented in the US meaning that most are open to trying newer services and testing out the latest technology.

Add these two facts above and you have some of the explanation of why the phone card market is declining. With each passing year more and more telecom companies are targeting the Hispanic community meaning more competition and less sales for prepaid international phone cards.

Read the full article here

IDT Management Merry-Go-Round Stops And Three Fall Off!

On Tuesday IDT announced that two of it's senior Telecom executives are gone! Chief Operating Officer Marc Oppenheimer and Executive Vice President Motti Lichtenstein were said to have resigned (wink, wink, nudge, nudge) and Liore Alroy, former Net2Phone CEO, has been appointed as new CEO of Telecom.

This is a momentous time for IDT, not because of Liore Alroy taking over the ship which should help them, but because it marks one of the first times in a long while that IDT has pushed out executives. Normally the executives just get moved around! To me this move shows that IDT is finally realizing that it has to change and that change starts from the top down! The industry has changed in leaps and bounds and IDTs management has not.

For investors and business partners of IDT this is probably the most encouraging news from the company in years! It suggests that Howard Jonas is finally serious about turning things in his core business around.

You can read the full press release here

Prepaid Calling Card Study Part 2 - On The News

Here is part two of the Univision report on phone cards.

Prepaid Calling Card Study Part 1 - On The News

Recently Univision aired a two part feature story on the phone card business. I'm sorry but this video is in Spanish only.

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.

Howard Jonas "Jew of the Day"

No this is not some anti Semitic post, there is an interesting article out there where Howard Jonas is the called "Jew of the Day"

http://www.jewoftheday.com/categories/culture/Jonas%20Howard.htm

The article basically touts his work and support of the Jewish community and gives you a feel for just how Jewish IDT is as a company, talking about the Kosher cafeteria, the synagogue on site and it's orthodox employee base.

Not really news but the name of the site caught my attention and the background it gives you on Jonas is insightful and on point.

Skype Sues PennyTalk Calling Card for Patent infringement

In one of the most ridiculous things I have seen recently, eBay, the parent company of Skype, has sued IDT over a claimed patent infringement on the PennyTalk calling card. While no details of the lawsuit were released other than PennyTalk is using a 2000 patent of theirs for a "long distance telephone communications system."

Now if I am correct PennyTalk is just a prepaid calling card, which is the most basic form of telecommunications service... does Skype have a patent on calling cards?

This just smells of abuse of our legal system and is no doubt a tit fo tat retaliatory lawsuit to get revenge on IDT for suing Skype for a VOIP patent infringement issue. While I don't know much about the IDT lawsuit against Skype, I do know that if anyone can claim ownership of VOIP patents, it is IDTs Net2Phone group who was one of the founding fathers of the VOIP business but I can guarantee you that Skype claiming it has patents in the calling card market is just plain ridiculous!

To read the brief announcement click here

Tarjeta Talk Commercial

Commercial for the Talk phone card from PT1.

Oblio Goes Back to SmartTalk for Calling Card Service

Oblio has come full circle, announcing that they will now be using Smartalk again for all of it's prepaid phone cards. Oblio had been with Smartalk for most of the first half of this decade but then left for Sprint, with whom they partnered to be able to expand their prepaid mobile business. While it is not clear if Sprint shut them down or that Oblio was just unhappy with the service, Smartalk will now be the provider of choice going forward.

If hindsight is 20/20 then they are probably thinking they should not have left for Sprint in the first place.

It looks as if Oblio and it's parent company Titan Global Holdings are at least trying to turn around the business and bring it back on course but unfortunately there has been too much damage to consumer confidence and distributor relationships to be able to solve the problems just by switching carriers... might be too little too late!

Speedypin.com Sold to NewWest Capital Partners

Speedypin LLC, one of the oldest phone card websites online (founded in 1997), announced that they have sold off the assets of their business to Denver Colorado based NewWest Capital Partners. The financials of the deal have not been disclosed nor is it clear if the existing management of speedypin.com will remain on with the company.

Speedy pin is also known as 1st USA.com Phonecards, Inc

speedypin.com & New West

The full press release can be seen here

Titan Global Announces that Counterfeit Cards are in the Market

In what has seemingly been a long couple of months for Oblio distributors, Titan Global Holdings, in what appears to be a bold PR move, announced yesterday that there are a slew of counterfeit Oblio branded cards in the market and will be replacing any unused cards for all distributors or retailers with such cards. They also claim that they are pursuing legal action against the alleged counterfeiters in Texas courts. In a press release on the Center Dialy Times, they claim that a former employee of Oblio and several outside distributors worked on their own against the companies knowledge and as a result created these counterfit products. They are pursuing a Racketeer Influenced and Corrupt Organizations (R.I.C.O.) Act case against these individuals.

While I have no way of verifying if Titan's claim is true or not, it just seems to me as if they are using this claim of counterfeiting to cover up some bad business practices on their end. Their cards have not been working properly for months now and only this week they announce it is because of counterfeit cards on the market????

Who knows it could very well be true and the courts will be deciding this some day soon but I just have my doubts!

To tell if your cards are possible counterfit they say... "Unless the customer service number is 800-394-4868, it is counterfeit, suspended, or expired."

**The views above are my own personal opinions...

Click Phone Card Commercial - Entrix

Here is another Spanish language commercial for the Click phone card from Entrix.

Howard Jonas Issues White Paper on Future of IDT

In a surprising move, after much silence, Howard Jonas officialy released a white paper on the current status of IDT and his views on the future direction of the company. Mainly written to address the investors concerns over recent performance, Jonas lays out why he feels IDT is performing better than the numbers indicate, blaming the shortcomings of the GAAP accounting principals for the bad overall financial picture. He claims that because of GAAP, things like training, process improvements and advertising are listed as operating expenses and not as investments in the future of the business.

The second half of the white paper lays out his vision for the future of IDT as a business and judging by the lack of any mention, Telecom does not seem to be viewed as a significant part of IDTs long term vision.

Mr Jonas points to businesses like Zedge, an online community portal, IDT Carmel, a receivables management group and it's recent Oil Shale business aquistion as the companies shinning stars. Interestingly he also mentioned another business called Depot USA which will be an online store that only sells goods made in the USA.

You can read the full white paper here

Ibasis Q4 Earnings Transcript

I was reading through the Ibasis earnings transcript today and two things caught my eye:

1) Their phone card business, like everyone else's is declining rapidly: "Our retail business consist of our retail prepaid calling card business and our Pingo eCommerce business. Revenue from our retail business in Q4 was $24.8 million compared to $32 million in Q3." They try and spin it and claim it to be the result of the cleaning up of the prepaid business... they offer clean cards now and others don't putting them at an unfair playing field.

2) Ofer Gneezy said that they anticipate 2008 to be a big year: "We said we believe 2008 will a pivotal year in the evolution of iBasis and perhaps in the evolution of the international voice business over all. " and also later goes on to say: "In addition, we believe that with our scale efficiency and focus on international voice, iBasis is perhaps uniquely positioned to lead the consolidation of this segment of the Global Telecommunications Industry." Is there something in the works here? We know they just merged with KPN but the statement above raises questions like will they be pursuing other company acquistions as well? Consolidation in the telecom business is already underway but it would suprise me if Ibasis had enough capital to be the one doing the aquiring ...

Read the Full Transcript

La Sexy Phone Card Commercial

Another Spanish language phone card commercial for the Sexy phone card by 9278. Combines two things that everyone guy loves, hot women and Baseball.

Interesting Oblio Telecom Press Release

Titan Global Holdings issued a press release on Tuesday describing the problems they were having with their telecom division Oblio. It's interestting to see their take on why they think things are bad! Here is a quote from the press release that basically makes it look like their distributors are the ones who are screwing them not the other way around:

"Subsequent to the three months ended November 30, 2007, the Company's communications division experienced a significant decrease in sales and collections of outstanding accounts receivable. Many of the long-standing distributors of the Company's wholly owned subsidiary Oblio Telecom's products stopped placing orders for new product and stopped sending payments for previously placed orders. While we are vigorously pursuing legal action against many of these customers, the extended collection process has significantly disrupted the operating cash flow cycle of the prepaid international long distance portion of the Company's communication's division. These issues along with losses experienced in its network operations have resulted in the Company ceasing to do business as Oblio in the prepaid international long distance market. As such the Company evaluated the division's goodwill and other intangible assets for impairment based on changes in the business model. Based on the determination of management, the Company impaired the goodwill and certain intangible assets of Oblio."

So I guess they are trying to say that all of the distributors got together and just make a pact to not pay Oblio for their cards... yeah right! They also announced that they have given up the prepaid wireless business.

Read the full Titan Global Press Release

Company Profile: Oblio Telecom

Oblio Telecom

Founded: 1995
Ticker Symbol: N/A (now owned by Titan Global Holdings trading under symbol TTGLE.OB)
Employees: 40
Locations: Richardson, Texas

Timeline

1996: Sammy Jibrin and Radu Achiriloaie open the business
2000: Land deal with AT&T to provide their back end service for all of their phone cards via the Smartalk brand.
2005: Taken over by Titan Global Holdings, Inc in exchange for stock which was later returned to Titan since the taxes would have been more than the profits. A loan was later issued that was not required to be paid back... full story - Oblio also launches it's prepaid mobile product Bravo
2006: Oblio switches it's back end provider for their phone cards to Sprint and leaves long time provider Smartalk.
2007: Oblio Telecom is name to Intelecard's 10 to Watch list (everyone knows this is the kiss of death). Oblio receives 4 million dollars back from IRS for past Federal Excise Tax payments.
2008: Oblio Phone Cards start giving much lower than advertised minutes

Other Sources:
http://www.wirelessdealermagazine.com/spring07/Downloads/pdf64-65.pdf
http://www.obliotel.com/
http://www.herdonthestreet.com/protected/Research%20Reports/TTGL%20Initiation%20Report.pdf

Using Phone Cards in Iraq - The Only Way to Call Home?

I see tons of press releases out there about groups sending over phone cards to the troops in Iraq to help them call home and always wondered if people really understood the "phone" situation over there. To help calrify, here are a few hings you should know:

1) Some Military bases have AT&T pay phones installed and allow for the use of calling cards but beware the cards won't deliver the promissed minutes because they will incur a pay phone fee and if it is a non AT&T calling card will incur at least another $1.50 network access fee. These fees come off the balance of the card, resulting in less minutes. I have even heard reports that some of the pay phones block acess to other non AT&T 800 numbers.

2) Some Morale, Welfare and Recreation posts actualy offer VOIP Phone calling and the costs can be much better than phone cards but they are harder to come bye and subject to more "lag" and quality degradation based on the internet signal strength.

3) Government DSN phones are also available in some places where a soldier connects directly to an operator who connects him/her to the party of their hoice. The rates are similar to that of calling from your home phone in the US.

4) Iraq cell phones are also available locally to the troops but you must buy them off base. From what I hear the coverage is ok but the rates are somewhat more expensive.

5) Last but not least are sat phones which are not as plentiful but they deffinately are useful in the more remote bases in Iraq where the amenities are not as plentiful.

Long story short, consult with your loved one over there and see which one of the above options is best for them and see if you can help them out in another way. Sometimes a phone card may be the best choice but other times more practical and economical methods are available.

PT1 Talk Phone Card Commercial

Spanish language phone card commercial for the Talk phone card by PT1

Proposed Changes to USF

Regulators are working on proposals that would change the way the old Universal Service Fund tax is dispersed. The changes propsed center around the distribution of the funds collected. Today all customers pay into this universal service fund and the money is then redistributed to smaller telcos in rural areas.

Porposed Changes:

1) Allowing Broadband and other smaller Telcos a portion of the funds

2) Creating a seperate fund for wireless operators

3) Changing to distribution based on cost and share of business not just equal for everybody and also giving funds to company who proposes the lowest bid for offering services to promote a more competitive environment.

The changes will most likely be open to more discussion and possible alterations but should go into effect sometime in the coming year or so!

Titan Global Holdings Restructures Phone Card and Wirless Groups

Titan Global Holdings, Inc., the parent company for Oblio Telecom Inc., announced yesterday that it was restructuring their Telecom units and getting out of the leased and owned network business and choosing instead to just focus on their core Distribution and Marketing strengths.

It has not been announced who will take over their switching operations (if anyone) or who Oblio will buy it's network services from instead, but it is certain that Oblio and Titan Wireless will now just go back to their original reseller business.

View full report

IDT Aquires Contoling Interest in EGL Oil Shale

If you needed more proof that IDT was looking outside of Telecom for it's future, today's news that IDT has aquired a 75% stake in EGL Oil should solidify IDT's strategy intentions.

EGL, a subsidiary of the private oil and gas company EGL Resources Inc., is 1 of 3 companies with a 10-year lease granted by the U.S. Bureau of Land Management to explore the potential for commercial oil shale production in western Colorado.

The financial details of this transaction have yet to be released.

CrossFone Supercanal Coomercial from Argentina

Argentina phone card commercial

Company Background: IDT Corporation

IDT Corporation

Incorporated: 1990 as International Discount Telecommunications Corporation
Ticker Symbol: IDT
Employees: 2,360
Locations: Newark NJ, Piscataway NJ, Long Island NY, London UK, Argentina, Uruaguay, Peru, Chile, Brazil, Hong Kong, Singapore, India, Japan, Philippines, Australia and other small offices worldwide

Timeline
1990: Starts company, International Discount Telecommunications Corporation, by offering callback services to international clients
1992: Company moves into Hackensack NJ headquarters building
1993: Gets into the carrier wholesale business
1994: Offers Dial-Up Internet access
1995: Company is renamed IDT Corporation
1996: IDT goes public
1997: IDT starts the business unit Net2Phone
1998: UTA, a joint venture with Carlos Gomez, is formed and IDT kicks it's sales of phone cards into high gear
1999: IDT has its first profitable year & spins off Net2Phone as a separate company and IDT relocates it's headquarters to Newark NJ
2000: AT&T buy up shares of Net2Phone for 1.1 billion dollars
2001: IDT buys back Net2Phone shares from AT&T for 92 million dollars and buys Talk America radio syndication network for $3 million... also buys PT-1 rights for 26.3 million
2002: IDT buys Winstar from Bankruptcy court for 42.5 million in cash and stock and creates IDT Entertainment
2004: IDT Energy is formed
2005: IDT buys mobile sharing company Zedge.net and forms new Internet mobile group and also launches TUYO Mobile a prepaid MVNO geared towards Latin American community
2006: IDT buys out all remaining Net2Phone shares and brings it on as a division of IDT & sells IDT Entertainment to Liberty Media, also creates company IDTJets and buys Spanish grocery company Vitarroz
2007: IDT files an anti-trust lawsuit against all of it's main calling card practices claiming deceptive business practices from these companies are hurting the calling card business and sells it's Toucan service and also aquires IDW Publishing

Sources:
http://milo.digitalentropy.com/projects/onaroll/ch14/10.html
http://finance.yahoo.com/q?s=IDT
http://www.fundinguniverse.com/company-histories/IDT-Corporation-Company-History.html
http://www.hispanicprwire.com/news.php?l=in&id=4801&cha=12
http://google.brand.edgar-online.com/EFX_dll/EDGARpro.dll?FetchFilingHTML1?SessionID=RDFQWN0wLt8W7zB&ID=5476635-187215-322877