Diamond Phone Card Reaches Settlement With FTC

In a follow up to an earlier post from 2009 regarding Diamond Phone Cards alleged misleading of customers, the Federal Trade Commission has announced that they have reached a settlement with Diamond Phone Cards in which Diamond will pay the amount of $500,000 (not legaly labeled a fine but we all know what it really is) and agree to stop misleading consumers about talk time provided by providing all fee details in the language for which the product is being marketed.

This brings the total settlement pot up to 4 million dollars for the FTC in it's war against the corrupt practices of phone card companies. Companies who have contributed to this number include: Total Call (300K), Clifton Telecard (1.3M), and a handful of Florida companies (2.25M). The 4 million amount only includes what the FTC has levied and does not include the additional cases brought by many State's Attorney Generals.

All Right Phone Card Commercial SDI

There are some very happy people in this commercial!

Boss Revolution Pin-Less Phone Card

IDT has been promoting their fantastic new product Boss Revolution very heavily over the last few months with ads in the Prepaid-Press, Craigslist, email blasts, and lots of local point of purchase material. The product is basically a standard pin-less rechargeable calling card like Pingo and PennyTalk but with much lower rates and a unique distribution program which allows anyone with access to the internet to become a reseller of the product.

Much like the Avon model, Boss revolution allows everyday people to sell the service to their friends, family and anyone else who could benefit from cheap international calling. Some people online are even reporting profits of up to thousands of dollars a month. If reselling is not your interest and you just want to enjoy great low rates you can visit a local store or go online to purchase one of the lowest priced calling cards out there... and to make it even better, they offer a try before you buy program which gives $1 free for first time customers.

To purchase, become a reseller, or to learn more visit them at http://www.bossrevolution.com

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

Ninel Conde Phone Card Commercial

Ninel Conde the famous Mexican actress, model, singer now has her very own phone card.

Government Crack Down On Phone Cards Goes North of The Border

While we here in the US have been undergoing a legal and governmental crack down on the phone card industry over the last couple of years, Canada has until recently enjoyed a care free business as usual environment. Well that all changed this month when one of Canada's largest prepaid phone card companies Phonetime Inc. was fined $300,000 by the Canadian Competition Bureau, a government agency in charge of business oversight, for misleading consumers. Phonetime will also need to offer 78% refund to any customer who returns a Bravo or Bravo Atlantic card to the company (a $10 card would yield a $7.80 return amount). However, most agree that it is highly unlikely that many will be able to return old cards as most phone cards as disposed of after being used.

Also required of Phonetime by the bureau will be a corrective statement to be placed in a national newspaper clarifying their cards fees and notifying the general public about the 78% return settlement on all old Bravo cards.

The settlement is final and Phonetime has been quoted as being very cooperative in this matter.

STI Launches A Sweepstakes To Help Boost Sales

Much like IDT did last year with it's Boss Card sweepstakes, STI has launched their own sweepstakes this year right in time for the important holiday sales season, it's called "Connect The World Sweepstakes." The sweepstakes offers a grand prize of $1,000 Cash and 1 year of free calling. Their are also other prizes: 2nd Prize of an LG 225 camera phone with $20 of calling time and a third place prize of a $20 phone card as well as other calling card prizes.

The sweepstakes officially began on 10/15/09 and will continue into the new year ending on 1/3/10. There are two ways to enter with the first involving entering in your phone card pin online along with your contact information or you can enter online by testing STISWEEPS to 878787. No purchase is technically needed to play and free codes can be obtained online or by SMS by following the instructions provided.

Full rules can be found here: http://www.stisweeps.com/STIOfficialRules.pdf

La Que Ta Phone Card TV Ad

Here is the latest phone card advertisement I found

International Mobile Top Up Presentation from iPayStation

In following with the previous post I came across another company who is doing this type of service. This presentation is by iPayStation on their international mobile top up business.

International Mobile Top Up Presentation From The Prepaid Press Expo Aug 20 2009

View more presentations from iPayStation.

C&W Lime Phones Now Rechargeable Through US Western Union Locations

C&W Lime mobile phone throughout the Caribbean can now be topped up at authorized Western Union locations in the United States. A patron with family and/or friends in the Lime Caribbean countries now can top up their friends and/or families Lime mobile phones just like they were wiring them money.

The process goes through MoreMagic Solutions IRR Global Hub, and is initiated just like a Western Union MoneyGram transfer, with a customer filling in the paper work with desired money amount and mobile phone number of the person's phone whom they wish to recharge. Once the funds are deposited to the account, the Lime subscriber receives an SMS message notifying them of the top up transaction.

This solution seems to be coming to market at just the right time since the poor economy is hitting quite hard in the Caribbean region (mostly due to the large decline in tourism revenues).

Individuals in the US can also purchase Lime top-up services online at https://www.etopuponline.com/lime/

Turbo Talk Calling Card from STI

Somewhat of a cheesy commercial but you can't beat the combination of a good looking girl and a fast motorcycle.

Total Call International Settles Class Action Lawsuit

Total Call International announced last week that they had reached a settlement in the class action lawsuit recently brought against them by plaintiffs nationwide. The class action suit alleged that Total Call International sold prepaid phone cards without properly disclosing all of the fees and charges on their products. While Total Call admits to no wrongdoings they have agreed to the settlement to keep from having to pay further dollars in legal fees defending this mater.

While the settlement is not completely finalized yet (still requires court approval), it will give any customer who purchased a card from them between January 1st 1999 to July 28th 2009 a replacement pin valued at $0.50 to customers calling domestically (with a $0.10 a minute rate) or a pin valued at $0.25 to those calling internationally (with an undisclosed rate).

To qualify to receive a replacement pin, customers must submit a PIN number from an eligible Total Call International calling card or submit a notarized, written statement declaring that they were the purchaser of an eligible Total Call International calling card. Seems like a big process to get a $.50 PIN especially if you don't still have the pin from one of your cards in the past!

For customers to file a claim they should visit Total Call's website at http://www.totalcallusa.com/news

Just one interesting point of note, the law firm that orchestrated this whole class action lawsuit is Freed & Weiss LLC, the same one that brought the class action suit against Locus Telecommunication last year.

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!

La Doña Phone Card TV Commercial

Here is a cute commercial for the La Dona phone card from SDI.

FTC Crack Down Continues - Diamond Phone Card the Latest Target

The Federal Trade Commission has once again cracked down on phone card distributors, this time going against Diamond Phone Card, Inc. a Elmhurst NY based distributor. The FTC is claiming that Diamond has been misleading consumers with false advertising practices (the same claims as with the ones from before) which stated more minutes on posters than the cards actually delivered. They are also accused of not adequately disclosing all terms and fees on their products and marketing materials.

The FTC has brought the mater to the district court and is seeking an immediate halt order to be issued to stop these deceptive practices. They are also seeking punitive damages, most likely in the millions if you use the Clifton Telecard Suit as a benchmark.

One of the examples given by the FTC was that one Mexico product from Diamond advertised 400 minutes to Mexico but only delivered 106 minutes of calling time.

This most likely will not be last case we see against phone card distributors. It just shows that all of the distributors and service providers need to clean up their act or else it could end up costing them millions.

Read the full article here: http://www.consumeraffairs.com/news04/2009/08/ftc_callingcard_scam.html

Sprint Makes It Official - Buys Out Remaining Stake in Virgin Mobile USA

For those of you doubters all I have to say is I told you so ;)

Sprint finally made it official last week, announcing that they had acquired the remaining shares of Virgin Mobile USA (they previously owned 13% of the company) for $483 million in equity. This resulted in Sprint paying $5.50 a share a big premium considering the stock had been selling for less than a $1 earlier in the year.

Considering Sprint just reported a loss of over$388 million in it's last quarter and a loss of about 257,000 subscribers, this deal is a must for the carrier struggling to make ends meet. The one downside to the new subs Sprint is inheriting from Virgin, is that they are much less profitable ones than the post paid customers. On the plus side, removing Virgin as a competitor, helps Boost/Virgin solidify it's space in the price war ridden and fast growing pre-paid space.

Time will tell how this deal actually plays out but on the surface it seems like it could be a smart move for Sprint.

Tanto Phone Card Commercial

Here is a commercial for the Tanto phone card from Nextcarrier Telecom Inc.

Virgin Mobile Sprint Buyout - Update

About a week ago I blogged about a rumored buyout by Sprint of Virgin Mobile USA. For those of you wondering if this rumor is true... all I can say is I am fairly certain it is going to happen! Maybe not as fast as I originally stated but it is coming and soon. If I was a betting man I would go with this week or next.

Sprint is desperate and are struggling to add new subs... so the only way they can solidify their position is to get more subs through acquisitions (yes I know that Sprint is the underlying carrier for Virgin but the subs are not technically theirs).

Keep checking back as I will post any updates as soon as they happen!

Ibasis Posts 2nd Quarter 09 Earnings - Not Too Bad!

Ibasis released their Q2 earning numbers yesterday and addressed their shareholders. Overall their revenues were down over last quarter coming in at $241.3 million down from $255.5 million in the previous quarter. However, the good news is that they have managed to significantly reduce their operating expenses through vigorous operational efficiency programs and a salary freeze that they implemented earlier in the year. Total operating expenses in this quarter were $21.8 million down from $22.7 million in the previous quarter. They also had significant gains in net Cash available from the first quarter leading to a somewhat more optimistic view by many shareholders.

As for their phone card division, which includes their disposable bodega cards and their e commerce business pingo.com, they stated that they had experienced a 9% growth in revenue and a 12% increase in gross margin (their 4th consecutive quarter with growth in this area). In the second quarter for retail, "gross profit was $31.8 million or 13.2% of revenue compared to gross profit of $37.5 million or 10.4% of revenue in the second quarter of 2008 and $31 million or 12.1% of revenue in the first quarter of 2009 (Seeking-Alpha)."

Overall it looks like Ibasis is keeping pace in this difficult economy and putting a much greater emphasis into generating their own minutes via phone cards as evidenced in their phone card growth numbers.

Feliz Phone Card commercial From IDT

This is a commercial for the brand new card series from IDT called Feliz. The rates on these cards are fantastic!

Sprint Possibly Working On A Deal To Buy Virgin Mobile USA

I heard it from the rumor mill today that Sprint might be working on a deal to acquire controlling interest in Virgin Mobile USA, Inc. I don't know any of the details of the potential acquisition nor do I know exactly when and if this deal will actually go through but it sounds like a deal that would make sense. While I can't site any immediate proof, today Virgin Mobile just executed an amendment letter with Virgin (VEL) granting the company exclusive rights to the names "Virgin Mobile," "Virgin Mobile USA" and "Virgin Mobile Broadband to Go." This move would be of no importance if Virgin Mobile USA was continuing with business as usual!

Sprint is currently the underlying carrier for Virgin Mobile, so integrating their customers into the Sprint systems should be relatively easy. Also with the growth in wireless subscriber count only coming through mergers and acquisitions for the big 4 providers, this deal would certainly be a welcome surprise for Sprint shareholders. The addition of roughly 5 million subscribers to Sprint's true subscriber counts would be a huge move.

This deal, if true, would also remove one of the largest single MVNO competitors in the US marketplace, thus cutting down the competitive landscape. It would be interesting to see if they continue with Virgin Mobile brand name or roll everything into their Boost Mobile prepaid brand name.

So stay tuned to see what happens!

MetroPCS Adds Unlimited International Calling for $5 a Month

Well the phone card business just had yet another big shot across the bow! MetroPCS is now offering unlimited international calling to over 1,000 destinations worldwide for just an additional $5 a month (you must be using either their $40, $45 or $50 plan to qualify). The destinations are mostly those in the 1 cent per minute category like most European land lines, Argentina, Hong Kong and many others. They have been very careful not to advertise the locations and do not post them on their web site. In order to see if the destination you need is included, you must enter in the complete telephone number you want to call in a look up tool they provide.

Prepaid Mobile has probably been the biggest contributor to the decline in the phone card market, with seemingly better attention paid to the international caller, a market for which the post paid companies still refuse to address. Not only has prepaid cellular helped to get recent credit challenged immigrants cell phones, it is now becoming one of the preferred methods to make international calls. I can't say I blame somebody either, straight dialing is much easier than having to worry about buying a phone card and then entering in all of those pin numbers before every call.

I wonder if Boost Mobile, who has seen great success with their $50 a month unlimited package (700,000 new subs in one quarter since announcing the plan), will counter this MetroPCS with a similar international calling add on package? If they do, they can easily negate any market advantage gained by MetroPCS's international plan.

Clifton Telecard Settles Suit With FTC

It was announced today that Clifton Telecard Alliance One, LLC has agreed to a settlement with the FTC in the amount of $1.3 million dollars. The lawsuit was brought against Clifton Telecard back in March 2008 and alleged that CTA had been falsely advertising the amount of minutes available on the prepaid phone cards.

The settlement is to be paid within 5 days and the funds will be wired into a unique bank account for the FTC set up to use for Consumer redress. Any remaining funds will be deposited into the United States Treasury.

The settlement came as no surprise as it is hard to fight the government and win especially when it comes to prepaid phone cards which, let's face it, were engaging in a large abuse of false advertising as a whole over the last few years. However, the amount of the settlement is not much more than a slap on the wrist for a company that produces over 4 billion dollars worth of calling card sales per year.

Source for data in this article = Examiner.com

Happy Phone Card TV Ad

Here is a Spanish language phone card tv ad for the Happy phone card from SDI.

IDT Buys out Carlos Gomez's Stake in UTA

Well the long and successful partnership of over 15 years between IDT and Carlos Gomez is now over. IDT has bought out Carlos Gomez's 49% share in the Jointly owned Union Telecard Alliance for $6.9 million in cash and other assets.

No one is exactly sure what prompted the transaction, but there is no doubt that this is a good deal for Mr. Gomez, whose UTA business has been declining rapidly over the last few years (just look at their quarterly earning statements over the last few years). Getting 6 million plus to get out of a business that has a rough future is something all of us prepaid distributors would love to be presented with!

IDT seems to be exited about the transaction with IDT CEO remarking "This deal will not only enhance IDT's operational capabilities, but is also in keeping with management's commitment to restructure and simplify our business..."

This is a toss up at this point with the potential for the company to go either way. Only time will tell who got the better deal.

To view the full article click here

Phone Card Mania Launches New Look and Cash Back

PhoneCardMania.com has a new look and feel this week, with the same great selection of phone cards and an easier to navigate interface. Along with the new design, phonecardmania.com has launched a loyalty program that rewards their frequent buyers with 3% cash back on all orders. "Our regular customers are our bread and butter and we needed to implement a program that treats them special" said Emma Lee President of marketing. The site also now included a live chat feature to help answer customer questions quicker and more effectively. "Our goal is to convert every visitor into a sale and we felt Live Chat was a valuable tool to help do that" said Mrs. Lee.

According to Mrs. Lee the redesign of the site has been a long time in the making "it has been a big undertaking to introduce the new look and features but is long overdue and it was designed with the customer in mind."

Visit the new look site at http://www.phonecardmania.com/

TouchTell Communications Store in Texas Robbed - Video of Supspects on YouTube

Texas Phone Card distributor Touchtell had one of their stores robbed on May 30th by two suspects in an attempt to steal thousands of dollars worth of prepaid phone cards. To help the police catch these suspects, Touchtell has posted the video from their security camera, showing the two suspects, up on YouTube. From the looks of the video it didn't look like they were having much luck finding anything of interest to them.

The suspects are described as two black men in their mid to late 20’s, both with medium builds. They appear to be somewhere between 5’7” and 6’0”. Anyone with information regarding this offense or the suspects in the video is asked to contact Detective Amy Smith at (214) 670-6179.

Colorvision Phone Card

Color Vision Phone Card commercial by SDI. This phone card mainly targets Dominicans in the United States.

Total Call The Latest Ordered To Pay Up and Be Clean!

Total Call International a leading phone card provider located in California is the latest company ordered to pay penalties and clean up their cards.

In a civil case brought by the State of California, Total Call was ordered to pay $300,000 in penalties and mandated to be monitored for the next 4 years to ensure that they no longer charge "hidden and deceptive fees" which are against the State's false advertising and unfair competition laws. In order to remain in compliance Total Call must clearly disclose all charges on it's advertising materials and the cards themselves.

In response Total Call has already started removing some fees from it's products and has begun to revise all of it's marketing materials to get into compliance.

Poor Economy Hurting the Bodegas

While there is no doubt the economic woes of this country has hurt the telecommunications business, I never once thought that the small mom and pop stores would be feeling it as hard.

According to a recent article in the Charlotte Observer small bodegas in the south that used to do quite well with their money remittance products are seeing that business almost cut in half. One store they reference in the article used to do over $4,000 a day in money remittance and is now doing only $2,000 a day. The reason for this decline is that many of the communities who had high concentrations of migrant Latino workers are seeing those migrants going home and staying home since there are just not that many jobs anymore (mostly in construction and farming).

While calling card sales have not dipped as dramatically for this store, there is no doubt that those sales are down as well since most of those people that used to use the money remittance service also purchased phone cards.

The migrant worker population is much larger in the South and Western parts of the United States so the decline is felt much more in those areas than in the Northern areas where most of the immigrants are permanent rather than temporary.

April's Poll Results - Will There Be More or Less Government Involvement in 2009

The results for April's poll have been tabulated and here they are:

We Asked:

Will Federal and Local Agencies Continue To Crack Down on The Phone Card Business?

You Answered:

Yes 14 (63%) No 8 (36%) Not Sure 0 (0%)

Special Mother's Day Boss Phone Card Commercial

IDT is running a new promo on the popular Boss card for mothers day where they are giving away tons of prizes and 5,000 dollar grand prize.

IRS Employees Spent 8.4 Million of Tax Payer Dollars on Calling Card Calls

In a recent report by the Treasury Department, it was disclosed that the IRS had issued just over 34,000 calling cards to it's employees for the purpose of making business related long distance calls (primarily for dialing into conference calls). The most disturbing part of the report is that in the period from October 2005 to April 2008 the total spend on these cards was about 8.4 million dollars. In one case it was found that 1 calling card in particular had made over $59,000 worth of calls in a one year time frame.

The abuses of these business issued calling cards is just another example of the governments total lack of controls in the way they manage their funds. The report points out that there is a glaring need for the IRS to increase their controls over the use of these government issued cards... ya think???

The sad part is the best solution that the IRS can come up with is to review these numbers quarterly for better identification of abuse and fraud rather than it's current trend of once every three years. How about reviewing who actually needs one of these cards in the first place and limiting the number of people with government issued cards into the hundreds rather than in the tens of thousands! In the modern day with low cost mobile plans, all inclusive conference services and free (or close to free) calling methods like Skype, why in the world would the IRS need to have so many calling cards circulating around?

Knowing how slow the government tend to move, it would be of no surprise if we are still seeing the same high spending a year or two from now as well!.

The service provider for these cards is AT&T

Complete details of the IRS calling card program can be found on the IRS website at http://www.irs.gov/privacy/article/0,,id=161120,00.html

Primus Telecommunications Files Chapter 11 Bankruptcy Protection

Long time telecom player, and phone card provider, Primus Telecommunications Group Inc. filed for chapter 11 bankruptcy protection this week in Delaware bankruptcy court. They had been on financial hard times the last few years and had been managing to make ends meet these last few years since their big tumble in 2006 but were no longer able to stay afloat with a huge mounting debt. Hoping to find some relief from creditors and have a chance at restructuring they finally decided to go into chapter 11. It is important to note that the company does plan to try and restructure and is not necessarily heading into chapter 7. They have given a timeline of about 120 days to complete their restructuring.

Their main businesses include carrier wholesale, phone cards (small), home VOIP service (lingo) and various other VOIP based business offerings. Their 4th quarter 2008 net revenues were reported at 203 million and close to 1 billion in liabilities. The filing did not include their separate sub business entities in Europe, Australia, Brazil, India and Canada.

NJ Division of Consumer Affairs Settles With 7 Calling Card Companies

Today the New Jersey Department of Consumer Affairs announced that seven phone card providers have agreed to a settlement in principal with the state regarding possible misleading and deceptive advertising practices (sound familiar).

Dollar Phone, IDT, STI, Total Call, Epana, CVT and Locus have all agreed to a settlement with that state that will involve the companies cleaning up their advertising practices, agreeing to three years of close monitoring, paying a 1 time $5,000 amount to the state to help cover the costs of the investigation and an additional $5,000 a year for each of the next three years to help pay the costs of monitoring (CVT will pay the initial $5,000 but not the additional $5,000 a year since they are no longer operating an active calling card business).

I am now left wondering how many other states are going to take the phone card business down the same path? Are we going to see all 50 states go sown this same path?

To view more details about the settlement visit: http://www.consumeraffairs.com/news04/2009/03/nj_calling_cards.html

My Friend Phone Card Mexico Commerial

Cute commercial for an SDI card.

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.

Poll Results - Which Phone Card Provider Will Do Best in 2009?

The poll results are in and here is how all of you voted on the question of "Which Phone Card Provider Will Do Best in 2009?"

62% of respondents said STI will do best in 2009
12% of respondents said IDT would do best
10% of respondents daid Locus would be better
8% of respondents said Total Call would end up as the top performer
6% of respondents said Ibasis would do best

There is no doubt that STIs recent pick up of CVT puts them in the best position for 2009 but I wouldn't count out IDT, who still controls a very slight lead in market share. While all of these companies know how to do the tried and true, the leader will be the one that branches out and adds new products to their mix like international mobile top up, prepaid mobile, and money remittance.

Richard Allen Harding Passes Away

I was saddened to learn that last month Richard Allen Harding had passed away. Richard had been in the telecommunications business since the early 80s and became most well known to us in the prepaid industry through his roles as Chief Operations Officer for 9278, Chairman of the now defunct International Prepaid Communications Association (IPCA) and most recently as President of his own company Giraffe Communications.

While I never new Richard on a personal level, I did have the opportunity to meet and discuss with him a few times at the various InteleCard Expos. He was a very tall guy and heavy in stature and was intimidating but after having met and spoke with him I had realized that his size was not representative of his personality. He seemed very kind and genuine. He will be greatly missed in this industry!

Richard was 57 years old and passed after a brief battle with a yet unknown illness.

King City DMV Phone Card Commercial

Here is a commercial for the King City DMV prepaid calling card.

IDT Announces Move To Smaller Headquarters

After years of downsizing it's number of employees, IDT announced today that they will be downsizing their square footage as well.

According to their press release, sometime within the next 90 days, the company will relocate it's headquarters, currently located at 520 Broad Street (former headquarters of Mutual Benefit Life Insurance Company) down the street to the smaller 550 Broad Street building. The move, according to IDT Chairman Howard Jonas, is a cost savings measure aimed at reducing costs: “We have fewer employees than we did several years ago, and, as a result, we now use considerably less corporate office space. Consequently, we have decided to consolidate our operations into a more cost effective facility.” The company has less than 600 employees left at the location and the cost to maintain the roughly 200,000 square foot building alone exceeds 5 million annually.

IDT moved to Newark back in 2000 when it outgrew their smaller Hackensack location. Lured by lucrative tax breaks by local and state agencies, the IDT buildings giant American flag became a fixture in the Newark skyline for almost a decade. Recently the company began looking for new tenants to occupy many of it's now empty floors but the challenge of renting in Newark has proved a daunting task with many surrounding buildings also half empty and desperate for tenants.

According to the Star Ledger the building, which is owned by an affiliate company, will most likely go into foreclosure but Howard Jonas said it will try and work something out with the lenders.

Virgin Mobile USA Plan of Compliance Accepted by NYSE

Virgin Mobile USA, once touted as the shinning star of the MVNO industry, fell below the $1 a share mark back in December and as a result received notice from the NYSE that it would be delisted for failing to meet the minimum requirement of a share price of $1. In order to remain listed, Virgin submitted a plan of compliance to the NYSE on Demeber 24th.

Just this past week the NYSE had announced that it had accepted Virgin Mobile's plan and that they would receive until May of this year to bring their stock price back above the $1 a share mark. Their shares have been hovering around $0.80 since the beginning of the year but the 4th quarter earnings will be released on March 3rd and that should give an indication if they will be able to remain a publicly traded company or not!

If Virgin should for some reason end up being delisted, it is by no means an end for the company but it will be tough for Virgin to continue to operate at the levels they had been in years past. They have already implemented staff reductions and will no doubt have to continue to cut back if they can't remain listed.

Locus Telecommunications Agrees to Settlement in Phone Card Class Action Suit

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

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

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

Hot Dog Prepaid Phone Card TV Commercial

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

Locus Telecommunications Inks A Deal With Best Buy

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

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

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

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

IDT Posts It's First Quarter 09 Results

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

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

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

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

CVT Prepaid Begins Winding Down

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

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

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

Calling Card Nuestra Liga - Phone Card Of The Month

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

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

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

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

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

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

12th Company Reaches Settlement With Florida Attorney General

Business Telecommunications Services, Inc., also known as ADMA Telecom, Inc. reached a settlement deal with the Florida State Attorney Generals Office in regards to the recent actions taken by Florida to crack down on the practice by phone card companies of delivering less minutes than promised. In June of this year, 10 companies had settled with the Attorney General (including IDT, Dollar Phone, STI and others) and then a few months later an 11th company, Cinco Telecom Corp. settled.

Terms of the settlement were similar to the other companies, with ADMA Telecom agreeing to disclose all fees and charges clearly and by delivering the advertised minutes. In addition the company also agreed to auditing for 3 years and to donate $75,000 to the Hispanic Institute, the organization that assisted the Attorney Generals office with their investigation.

The State's Economic Crimes division will also continue to look into other companies and has acknowledged that there are still a few more companies under investigation.

The official release from the Florida Attorney Generals Office can be found here.

Virgin Mobile Posts Decent Q3 Numbers

Prepaid mobile leader Virgin Mobile announced their Q3 earnings last week and while the numbers didn't blow anyone out of the water, they were rather encouraging. They rang up about 323.2 million in sales in Q3 with about 4.1 million of that in profit, not bad considering last quarter they made $3.6 million on $317.4 million in sales. Slightly less sales from last quarter but they manged to keep more from less, indicating a stronger operational efficiency and higher ARPU numbers (they average somewhere just north of $20 per month per user).

To show that Virgin is committed to maintain a more efficient workforce in these tough times they also announced that they would be cutting their workforce by 10 percent (roughly 45 jobs) in the coming quarter. While these cuts are not as bad as we see in other industries and companies, the mere suggestion of cutting jobs always leads investors and shareholders to loose confidence. The result of this announcement caused shares to fall by about 10%.

View Full Details About Virgin Mobile's Q3 Filing

Great Europe Prepaid Phone Card Commercial

Here is a commercial for the Great Europe Phone Card.

Pingo Adds Softphone

The popular rechargeable calling card from Ibasis called Pingo announced last week that they have added a new feature to their offer that will allow users to make calls from a softphone. The softphone is a PC based application that a user downloads from the Pingo site and he/she can use to make calls from their computer (internet connection required).

The softphone is not a new application and has long been offered by companies like Net2Phone, Skype, DeltaThree and many others but Pingo hopes that by adding this application they will open up a whole new user base of individuals outside of their current toll free and local access footprint. This service will be ideal for travelers and especially for those in the Middle East and Asia where softphone applications are commonly used. The only downside for Ibasis is that they will have a whole new fraud element that they will need to keep a close eye on going forward!

The one surprise of this offer is that they are not offering lower rates for using a softphone vs. the calling card. Odd since Pingo is actually able to save by not paying the inbound toll-free/local access charge for calls made via the softphone. I suppose they feel the convenience is the main attraction not a potential cost savings.

To learn more about this website visit their website softphone page.

New Calling Card Application Released For The IPhone

A new application for the Iphone has just been released that makes using calling cards from your mobile phone real easy. For a small fee users can download this application from itunes and install it on their Iphone. The application allows users to store multiple calling card access numbers and pins in one easy place and also allows them to call any one of their contacts using a calling card with a simple one touch dialing.

Iphone Calling Card Application Main Features:

• Set up multiple phone/calling card accounts and easily switch between them.


• Automatic card selection based on contact and/or number prefix.


• Set up a list of favorite numbers to dial, select any number from your contacts, or directly enter a phone number to be dialed.


• Full support for international prefixes (numbers stored starting with '+').


• Flexible call details setup allows for automatic dialing of most phone cards even if intermediate menu selections have to be made.


• Display local time for the contact to be called (time zone look up based on the phone number).

Full information on how to use this application and how to do the set up can be found at the following website: http://homepage.mac.com/aamann/CallingCard.html

To purchase the application visit Itunes and type in "calling card" in the search field

October Poll Results - Best Sales Months For Phone Cards

I would like to thank everyone who voted in our October poll "What is the best month for sales of phone cards." The votes have all been counted and here are the results:

1. December received 45% of the votes
2. May was second with 29% of the votes
3. November was third with 16% of the votes
4. August was fourth with 7% of the votes
5. September was fifth with 1% of the votes

All other months received no votes! So it looks like there are really no more than 5 possible good sales months for phone cards. I would like to thank everyone again and please be sure to vote on this months poll.

Vamos Phonecard Commercial

Here is a short Spanish language commercial for the Vamos prepaid calling card.

Potential Class Action Lawsuit Against Calling Card Companies

Well as if the calling card companies didn't have enough to worry about with all of the proposed government regulations and watch dog groups, it might just be getting a little worse with the announcement that the law firm of Statman, Harris & Eyrich, LLC is starting to look inot a potential class action lawsuit against some prepaid calling card companies including but not limited to alleged practices of CVT Prepaid Solutions, Inc.; Dollar Phone Services, Inc.; Dollar Phone Enterprises, Inc.; Dollar Phone Corp.; Dollar Phone Access, Inc.; Epana Networks, Inc.; Locus Telecommunications, Inc.; STi Phonecard, Inc.; Telco Group, Inc.; VOIP Enterprises, Inc.; Find & Focus Abilities, Inc.; and Total Call International, Inc.

This law firm specializes in class action lawsuits and is currently gathering data as well as customer complaints to decide how and if they should pursue this matter. So stay tuned and see if this graduates into a full fledged class action suit!

http://www.marketwatch.com/news/story/statman-harris--eyrich-llc/story.aspx?guid=%7B9FC977DA-5855-46E1-B05B-A48D77E6EF78%7D&dist=hppr

Oblio Wins 2.5 Million Dollar Suit Against Clifton Prepaid

Well it seems as if the Oblio mess continues even long after this companies notorious collapse. Back in August 2007, Titan Global Holdings (Oblio's parent company) filed suit against Clifton Prepaid Communications Corp in Texas court for non-payment of invoices based on services rendered. They had successfully won a Motion for Writ of Garnishment which in essence froze Clifton Prepaid's bank accounts until the trial had concluded. Clifton Prepaid had offices both in Texas and NJ and Mr. Aref had been the former owner of another phone card distribution company called Clifton Digital pior to opening this business. It's interesting how this is the second phone card company located in Clifton NJ to make the headlines recently... Clifton Telecard was in the headlines earlier this year for it's alleged deceptive marketing practices by the FTC.

Well the trial is now over and Titan won a 2.5 million dollar judgement in their favor but Clifton Prepaid's owner, Aref Aref, had already filed for personal bankruptcy making any chance of Oblio recouping the full judgement near impossible. However, Titan will be able to unfreeze the bank account and seize any contents towards the judgement and they have vowed to pursue Mr Aref further which will include monitoring all recent transactions between the defendant and any known associates or businesses for any "concealed" monies.

While I'm sure not many distributors or service providers have anything for disdain towards Oblio for having left them holding the bag with worthless cards, this judgement will possibly open up some chances for Oblio to actually make things right with their distributors that did not "screw them." Unfortunately this is just a common example of what goes on in the prepaid business... it's the mind set of some distributors and service providers who say I need to screw them up before they screw me up!

I hope Oblio gets everything from Clifton Prepaid and then all of the other honest business men and women who we hurt by Oblio get their restitution.

A full link to the story: http://www.reuters.com/article/pressRelease/idUS182111+29-Sep-2008+BW20080929

IDT Corporation CEO Jim Courter To Step Down In October 2009

IDT Corporation announced that current CEO Jim Courter will begin what will be his last year in that position, retiring at what will be age 68 (Born October 14th 1941). The long time CEO and former NJ Congressman (1979-91) will be replaced by majority owner and founder Howard Jonas. The previously announced company stock instead of cash payments will continue to be Howard Jonas's form of payment for at least 3 of his 5 year contract and Jim Courter will begin receiving company stocks instead of cash salary beginning in January of 09 all the way through his retirement in October.

Jonas had previously served as the companies CEO from 1991 until 2001 when he agreed to vacate that position in favor of Jim Courter, who had been serving as president of the company for the previous 5 years (1996-2001).

While there is no word on the conditions surrounding this change, there is no doubt that Jonas returning to the helm will signal a change in direction for the company. We will just have to wait and see if that change in direction is a positive or negative one!

Terremoto Latino Phone Card Commercial

Here is a Spanish language commercial for the Terremoto Latino card.

India Telco Bharti Brings Itself Into The Canada Rechargeable Calling Card Space

The large Indian Telco Bharti announced this week that they have introduced their rechargeable online calling card product called Airtel CallHome into the Canadian marketplace, just months (8 months to be exact) after entering the US rechargeable calling card market (service has also been available for some time in the UK and Singapore). With over 1.5 million Indian's living in Canada, they feel well positioned with a rate of roughly $0.058 per minute to take over as one of the prominent companies serving this community.

The space has been traditionaly held by Reliance but with Bharti's brand name and heavy marketing spend (see the Airtel CallHome TV Commercial) they feel well positioned to take over a significant market share. The battle will be tough as Reliance has held the #1 position in this market for a while now and they will no doubt put up a strong fight!

Virgin Mobile Lowers Calling Rates to Central & South America

Beginning October 15th, Virgin Mobile will lower rates to many South and Central Amercia locations. This move is meant to help secure a bigger portion of the Latin America calling market and will no doubt take away some business from the phone card providers who have traditionaly dominated this market segment. Some of Virgin Mobile's new rates are unheard of in the mobile phone business:

• Mexico - As Low as $0.02 per minute


• Brazil - As Low as $0.02 per minute


• Guatemala - As Low as $0.10 per minute


• El Salvador - As Low as $0.10 per minute


• Argentina - As Low as $0.05 per minute


• Dominican Republic - As Low as $0.05 per minute

To see a full list of rates go to their web page: http://virginmobileusa.com/rates/internationalCalling.do

While these rates may not be as low as some of the calling cards on the market, the convenience of direct dial from your mobile phone and the lack of the dozens of fees, might make this very attractive to many Central and South Americans living in the US. So all phone card providers and vendors should take note, this WILL take a bite out of your business!

Prepaid Press Running a Advertising Special

Just got an email from the Prepaid Press that they are running a special for the next couple of weeks on advertising. If you buy 6 Ads you get 1 free (must run November to April) and they will throw in a free button on their website as well as 1 email blast on your behalf to their base. They also have a buy 3 months and get half off the 4th month special.

If you are interested send an email to: lsimon@prepaid-press.com or call 1-866-203-2334 ext 512

Gasolina Latina Phone Card Commercial

I guess if you buy this phone card your car will turn into a Sports Car and you will get all of the women ;)

IDT Releases Q4 Financials and The Numbers are Poor as Expected!

IDT Corporation released it's 4th Quarter earnings on Monday and the results were as expected... poor! In total they had a net loss of $86.4 million mostly due to what they are claiming as restructuring costs. The company has undergone what it calls a major restructuring and to be fair this was announced in the Q3 results and investors were warned that this expense would be hitting the books in Q4. This exercise is going to provide IDT with what they claim will be a cash flow positive business by end of Q1 09.

There is no doubt that IDT has come upon rough economic times and is in need of some major changes to help it survive, but I am afraid this down turn is not unique to them and I am sure if other phone card companies were publicly listed (most of which are not), we would see the same results on their books.

IDT has to accept the fact that telecom is a shrinking business and in order to survive they need to streamline operations considerably. While cutting staff will be the main way to get there, they can't just cut blindly, they will need to streamline all back end operations through new management styles, outsourcing and new systems. This company will ultimately need find another new big cash generating business now or be in the neighbourhood of less than 500 total employees by the end of fiscal 09 in order to have enough cash to survive.

Don't get me wrong, I think IDT CAN DO IT and WILL find a way to survive. However, they need to pick up the pace in order to keep check with the market. Phone cards may be a shrinking business but they will still remain a real business for many years to come!

Interesting Article on Luis Arias President of Blackstone Calling Card Inc.

With all of the negative press and horror stories circulating around the media today, I thought I would share a more positive and upbeat story that I found from Smart Business on Luis Aria President of Blackstone Calling Card Inc. the article basically profiles how Arias runs his business and seems to point to how he tries to keep involved and paints a picture of Blackstone being a great place to work and a business with it's eye on the bottom line.

Here is the link to the article "Dialed In - How Luis Arias keeps Blackstone Calling Card consistently growing by getting everyone to work together"

September Poll Results Are In and the Winner Is....

Or September poll is now closed and the winner, as chosen by you the readers, for the lucky honor of being October's Phone Card of the Month is.... Los Temerarios card by CVT Prepaid (now STI) with a whopping 45% of the total vote. In second place was the Thank You card from SDI with 18% of the vote and in third place we had a tie between the S Card from Locus and the Boss card from IDT each with 13% of the total vote.

Be sure to vote in this months poll question "What is your best month for sales of phone cards?"

El Patron Phone Card Commercial

Here is a rather low budget but effective commercial for the El Patron phone card.

Letter From Laurette Veres - CEO Intelecard News Magazine

I received what amounts to a fond farewell letter via email on Thursday from the CEO of Intelecard News, Laurette Veres. The letter is basically to inform everyone once again of the end of Intelecard News (now part of Wireless Dealer Magazine) and to thank all of the readers for the last 14 years of readership. Here is the letter I received via email from Laurette in it's entirety:

Since 1994, my focus has been to provide news and information to the prepaid industry through InteleCardNews Magazine, www.intelecard.com and www.InteleCardExpo.com With over 250 print editions and 25 national expos, I've tracked this dynamic market place and the people in it. Providing news and information to the prepaid industry has been a nearly 15-year focus.

It has been my pleasure to track an incredibly dynamic marketplace and the dedicated entrepreneurs who have made it so. Yet the industry is still evolving; so
are we. I am pleased to announce the next phase in the InteleCard odyssey - a strategic merger with Wireless Dealer Magazine & Expo. As the prepaid and wireless industries converge, this merger is in-step with that trend to the benefit of our expansion and yours.

A refreshed energy generated by these markets will inspire your ongoing success with new ideas and the prospect of new partnerships and clients. InteleCardNews and Expo is dedicated to that, which is why I am personally inviting you to meet old and new players at our upcoming Expo. Join me there, and see what is possible for the next phase in your ventures.

Thank you for your loyalty and support, after all these years, and I can't wait to see you in Las Vegas !

Laurette Veres
CEO,
Intelecard News Magazine
www.wirelessdealerexpo.com

STI Takes Over CVT

I reported about a month back in my post "Rumor - STI in Talks with CVT Prepaid" about the rumored take over by STI of CVT Prepaid... well now it is officially not a rumor anymore!

Inside sources at those companies tell me that the "merger/takeover" is now complete and things are underway in merging the two companies together. For now it looks like STI will continue to utilize the CVT brand name at least for a little while and work to transition over all new pin generating over to the STI platform.

Operationally everything is still intact at CVT and no formal plans or layoffs have been announced about the merger, but I don't doubt that the CVT platform will be phased out eventually, since maintaining two independent calling card platforms makes no financial sense.

I'm sure STI will find some valuable resources in CVT (personnel, technology, hardware) and incorporate those into their operations but overall I think CVT as we know it will be gone by the end of the year. They had a good run but the industry has shrunk too much to sustain all of these companies. I'm also sure it won't be the last consolidation we see in this business this year!