Branching Out

Posted: 12/2003

Branching Out
Prepaid Vendors Try Out Non-Telecom
By Kelly M. Teal

Prepaid services are surpassing the
basic calling card as companies broaden their offerings to include flower
delivery, traffic school, Web-enhanced conferencing, roadside assistance,
newspaper subscriptions and more.

Paul Waadevig, an analyst for consulting firm Frost &
Sullivan, says businesses that made it through the recent economic downturn had
to evaluate how to stay afloat and be profitable. He says, They are thinking
to themselves …What do we have thats of value? What can we leverage?

Waadevig says the answer was to expand prepaid services into
areas not previously associated with the industry using their top assets:
retailers and proprietary expertise in PIN management. I think theres a
lot of experimentation going on to see what can actually be … legitimate as
far as the return on investment, he says.

Blackstone’s Touch & Go Kiosk

Indeed, companies such as Blackstone Calling Card Inc.,
WorldQuest Networks and Encompass Communications LLC are selling prepaid floral
delivery, traffic school, roadside assistance and Web conferencing as extensions
of their prepaid telephony businesses.

Blackstone is well known for selling prepaid calling cards.
Now, its Touch & Go kiosk system, recently installed at more than 300,000
places nationwide, allows consumers to electronically purchase services ranging
from flower delivery to traffic school to newspaper subscriptions.

We view prepaid as a category; it is not just prepaid
calling cards or prepaid long distance, it is a category, says Clare Morgan,
Blackstones director of corporate communications. Anything and everything
can be translated to a prepaid service. She adds that the ability to prepay
for a number of products and services allows people to control their budgets and
their credit.

Blackstone implemented its Touch & Go kiosks because it
saw that items such as prepaid Internet service were just dying on the vine,
says Michael Acton, Blackstones president. Morgan agrees and explains this is
because sales typically took place in retail stores where cashiers conducted the
transactions. Often, those workers had neither the time nor knowledge to
help customers.

The Touch & Go, however, features a self-service
interactive screen, presenting audio and visual information in English or
Spanish. Its kind of like the machines have become the
frequently-asked-questions resource, Morgan says.

Acton explains the education issue delayed expansion
into products outside of telecom. But, he says, the Touch & Go technology
now gives the consumer the opportunity to really drill down into the product
and find out what it does and how does it benefit them, if it does, and then
make a real educated decision on making the purchase, as opposed to having to
ask the cashier, How does this work?

For example, at a Touch & Go kiosk, shoppers can touch a
button to buy prepaid flowers from Eurofloral. They call the appropriate number
with the address for delivery and electronically complete the card for the

Blackstone also collaborated recently with two Miami
newspapers to offer prepaid subscriptions. Morgan says a customer finds a Touch
& Go kiosk, submits cash for the desired subscription type, receives a PIN,
and then calls the newspaper with the information for delivery. Some of these
customers dont have a MasterCard or Visa and dont have the luxury of
picking up the phone and just charging it. You know, it could be a kid calling
for his moms birthday, Morgan says.

Not only does prepaid service work well for people with poor
or no credit, its handy for those who travel and for younger people who have
not yet established credit. Youre looking at a population that is becoming
more budget-conscious … theyre very protective of their credit so that they
dont have to take out a long-term contract that may or may not affect their
credit, says Morgan. Theyre just becoming more savvy where their moneys

Another of Blackstones prepaid services is traffic school.
For traffic school, users purchase the course through Touch & Go kiosk and
receive the Web address of the online class. The course is available in timed
segments so attendees dont have to spend a long block of time on the

Another company augmenting its traditional transactions is
Encompass, which has added Web-based conferencing to its services. Jamie Fuller,
marketing director, says the technology is telephone conferencing with Web
access and Web control. She says it allows presenters to meet over on the phone,
post presentations to the Web and take advantage of features such as adding or
muting participants. When time on the prepaid card is about to run out, the
presenter can recharge the account using a credit card and a pop-up window
prompt, so no one has to leave during the meeting.

Fuller says most of Encompass customers are small
businesses, because the cost of conferencing if youre using the major
carriers is significant. She says Encompass is starting to see consumers
such as families talking during the holidays use the product as well.

WorldQuest is another business seeking to provide profitable
new services. CFO Victor Grijalva says the company will remain in the areas its
strongest, such as prepaid wireless, Internet and long distance, but added
roadside assistance to its prepaid options last year.

The new service rolled out after WorldQuest installed its own
PIN platform, allowing it to sell any PIN-based product electronically or over
the phone.

WorldQuest says the prepaid 24-hour roadside assistance, with
restrictions, will save users up to 70 percent on yearly service. Six months
protection costs $10, while a years worth runs $15. The prepaid $10 card pays
for two incidents. The $15 card covers up to four incidents. WorldQuest says
there is a $50 limit per occurrence; customers pay the difference if service
costs more than $50.

Grijalva says executives thought roadside assistance would
complement WorldQuests services, especially because the prepaid card comes
with some calling time. Its a nice little product for us, he says. Its
still pretty early in its lifecycle, gaining some interest. Well see how it

Blackstone Calling Card Inc.
Encompass Communications LLC
Frost & Sullivan
WorldQuest Networks

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