Phone Plus Prepaid: CHANNEL NEWS

Posted: 3/2003


AOL Sells Prepaid Internet
Through Retail Partners

By Khali Henderson

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

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

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

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

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

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.


America Online Inc.

AT&T Corp.

ePHONE Telecom Inc.

IDT Telecom


Innovative Communication Technologies

Power Cards Inc.

Q Comm International Inc.

Sprint Corp.

Switch Management Corp.

Western Union Financial Services Inc.


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