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Calling Cards 2.0 – part 2 November 17, 2010

Posted by themobilephoneconnoisseur in Uncategorized.
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Let’s continue with the real revolution; the prepaid international calling cards.

In the late 90’s the domestic call rates dropped dramatically, to as low as 2 cents/minute when calling from another landline phone. At the same time, carrier select (prefix) and carrier preselect became more and more popular due to gradual deregulation of the telecom sector. Prices dropped thanks to increased competition in combination with better connectivity between operators. More and more landline operators offered so called flat rates, i.e. a fixed rate per month to call unlimited to other landlines.

In parallel, in countries like the UK, the market exploded for prepaid international calling cards. The access numbers were changed to landline numbers instead of the traditional toll free numbers, consequently offering even “more minutes”. The new calling cards became very popular among immigrants, guest workers and refugees.

Commercial business in the so called ethnic market segment is interesting in that it often falls outside the regular government overlook, simply because the local government does not understand exactly what is going on. From the early 00’s companies like IDT, Lycatel, Vectone, Lebara and many more became established players, and they gradually built their own networks across the globe, cutting prices on international calls steadily and dramatically.

Lebara EuropeCalling cards were printed in colorful and creative ways. In early 2004, one of my first tasks as MD of Lebara in Sweden was to re-launch a calling card called Lebara Europe. I thought we were coming out with a sleek and trustworthy design, with mostly white, clear texts and some nice blue only images. Harout Artin, a well respected Middle Eastern calling card whole seller outside Stockholm, told me: “Erik, it looks like somebody died.”

The creativity in fees gradually went off limits due to lack of control. A calling card with 200 minutes to a particular country in reality was perhaps only 120, or even just 40 minutes. But most people who used them didn’t care that much about the “rip off”, as it was 90% cheaper than most other alternatives anyway.

The cards were thin, stackable and cheap to distribute. The volumes grew to billions of minutes and billions of dollars. The cards became cash, with a best before date on them. Black market trading became very common. Within a couple years the market was a mess, and less serious players entered and essentially destroyed a very nice idea. Leaving the consumer with a horrible product.

Next post: Calling Cards 3.0 – The online calling cards.

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