Phone Plus Prepaid: CHANNEL NEWS

Posted: 3/2003

CHANNEL NEWS

AOL Sells Prepaid Internet Through Retail Partners

By Khali Henderson

America Online Inc. rolled out its first prepaid Internet service -- in competition with Sprint Corp. and AT&T Corp as well as smaller, independent ISPs, just before the winter holiday shopping season. The service currently is sold through three of the ISPs retail distribution partners -- Target, Office Depot and Western Union Financial Services Inc.

"The great thing about prepaid cards is it can extend AOL membership to those who are not served by other AOL offers but who own PCs and want to get online," says AOL spokesman David Theis.

AOL users -- all 35 million of them -- generally pay by automatic monthly debit to a credit card, which excludes the unbanked, consumers concerned about releasing credit information online and those reluctant to enter a long-term commitment.

The company reports the prepaid product, which features 500 minutes for $14.99 and recharge cards for $9.99 and $29.99) is selling well but declined to release figures as of the end of January. In early test markets before its November 2002 launch, the company found customers not only were buying the service, but converting to subscriptions later.

AOL has been promoting the service through print advertising in newspapers and magazines, but is relying heavily on the point-of-sale display to attract users. The company is on record as working with Target, Office Depot and Western Union as distribution partners, but it also has potential distribution with other retail partners such as Blockbuster.

Keith Diveley, senior vice president of Western Union SwiftPay, says 400 of the 40,000 company's affiliate locations now carry the AOL Prepaid Starter Kit and recharge cards, which the company started shipping in mid-November.

Diveley also would not comment on the results of the rollout thus far, but he said the addition of Internet to Western Union's SwiftPay product line made sense. "I think it's an important part of the prepaid category," he says. SwiftPay now offers prepaid wireless (phones and recharge), local dial tone and Internet. Diveley says additions to the portfolio will include a prepaid credit card and a prepaid long-distance product.

ePHONE Launches Rechargeable Cards Via Channel

Global Internet telephony services provider ePHONE Telecom Inc. has announced the first wave of eSeries rechargeable prepaid calling cards available via Canadian distributors.

The company rang up about C$400,000 in initial sales orders during the first 10 days of the launch. ePHONE expects the rechargeable cards to make further inroads in the Canadian market for the rest of the year.

Customers can check call details and recharge their cards through secure online transactions. The rechargeable feature is of interest to distributors, says the company, because they can gain recurring income as cardholders purchase additional time on their existing card, rather than disposing of the card once the minutes have been used.

ePHONE provides branded and private-label prepaid calling cards, prepaid domestic calling plans and 1+ prepaid services through distributors, and offers wholesale, carrier-to-carrier solutions. By using voice over IP, ePHONE reports consumers save 50 percent to 70 percent over traditional providers.

Power Cards 2000 to Sell iNexcom Services

Power Cards Inc.'s Power Cards 2000 division has signed with iNexcom to use iNexcom's virtual switch platform. The prepaid card company will use iNexcom's wholesale rates to create private-labeled retail products, including a Ricky Martin card.

The offerings will be rolled out via Power Cards 2000's distributor program, which targets independent salespeople wanting home-based businesses. It offers channel partners turnkey support materials, from letterhead to templates for Power Cards layouts.

Walgreens Selects IDT as Calling Card Provider

IDT Corp.'s communications division, IDT Telecom, has been selected as the exclusive prepaid calling card provider to Walgreen Co., the largest drugstore chain in the United States. Walgreens will private label IDT's prepaid cards for the drugstore chain's nearly 4,000 stores.

The new Walgreens phone cards will be sold in $10, $20 and $40 denominations.

"This agreement with Walgreens, one of the largest and most trusted retailers in the U.S., is very significant for IDT Telecom, in terms of both revenue and prestige," says Motti Lichtenstein, CEO for IDT Telecom. "Our private-label calling card division has been hard at work signing up major companies as clients, offering quality service at competitive prices."

ICT Strikes Deal for Wholesale Billing

Innovative Communication Technologies Inc.(ICT), a full-service partition provider, has selected Switch Management Corp.'s WebCDR platform for hosted wholesale billing for partitioned clients.

WebCDR carrier billing is a Web-delivered service that allows carriers to outsource their billing operations. A provider can be up and running in as little as 48 hours with almost instant access to advanced switching and comprehensive billing, reports Switch Management.

Through its main facilities in New York City, ICT operates a Nortel Networks Inc. DMS 250, a NACT calling card platform, numerous gateways and gatekeepers. It caters to national and international carriers and resellers seeking to gain access to the U.S. and international telecom markets.

Q Comm, Point de Vente Form Service Bureau, With Channel Strategy

Q Comm International Inc. has teamed up with Point de Vente to establish a service bureau for prepaid services sold via point-of-sale activation (PoSA) terminals. The sales strategy includes channel distribution. Q Comm has issued its proprietary service bureau hardware and software to Point de Vente, a distributor of prepaid wireless and long-distance products and services based in Rosemire, Quebec, Canada. Point de Vente in turn has purchased Q Comm's PoSA terminals for more than 2,000 retail outlets in the Quebec and Ontario provinces of Canada, and will manage them through the service bureau system. Point de Vente will sell prepaid services through the terminals, and Q Comm will receive transaction fees from the system. Point de Vente began rollout of terminals in the first quarter of 2003. The company plans to sell the terminals and services to the stores, but, for the first time, also will work with other brokers and distributors.

"Our goal will be growth, whether by our own reps or subbrokers," says Jean-Pierre Poulin, president of Point de Vente. "So long as volume goes through us, we're delighted."

The terminals will make it easier to add new services down the line, adds Poulin. "We think ahead, and we like the fact that the Q Comm system is future ready."

Point de Vente sells prepaid wireless and prepaid long distance, and expects to offer prepaid MasterCard, cable and dial tone in the future. "We'll be ready to plug them into our retail network," says Poulin.

The new service bureau also will solve distributor problems, he notes. Because of the high occurrence of theft of prepaid services, "it's practically impossible for a prepaid distributor to get insurance in Canada. Electronic distribution services cut a distributor's risk by cutting theft and offers better inventory management," Poulin says.