Phone Cards

The VOIP world, which has been gaining lots of popularity due to Vonage's huge marketing spend, has experienced a huge blow this past week with SunRocket closing it's doors. The potential set back this had for the industry as a whole had so many of the major players worried, including Net2Phone and ViaTalk, that they rushed out and offered to pick up many of the remaining months of service for these customers free of charge.

SunRocket had about 200,000 customers at the time of it's closure, most of whom were locked into long 1 or 2 year contracts. What hurt the most was the fact that the customers had prepaid for their years of service and in the end were left holding the bag. Add this to the fact that Vonage is on shaky ground with the impending punitive patent infringement lawsuit from Verizon, and you have an industry whose future does not look so great.

For those of us in the prepaid calling card market can we look at this like one man's failure is another man's gain? It is still unsure how much these VOIP services contributed to the downturn in the phone card business in the first place, but it would be hard to believe that they did not at least play some small part in taking customers away. But before you go thinking that the business will go back to where it was, think about it long and hard. Some will come back but unfortunately it will most likely not be too many!

There are still so many other attractive long distance services gaining momentum like: prepaid mobile phones, Free PC to PC clients (Skype), Callback, Unlimited calling plans from traditional PTTs and many others. With all of these companies chasing the same pie, it is doubtful that prepaid phone cards can regain much. We are just an older out dated model whose only play left is with lower pricing and appealing to the credit challenged and recent immigrant markets (a group that is also becoming more savvy to the other alternatives).

Don't get me wrong... I am not saying prepaid phone cards are going to disappear tomorrow, it's just that this impending hardship in the VOIP industry is not going to mean many more sales for us!

Last week Vonage managed to get a stay on the order requiring them to stop signing up new customers until their appeal is heard and Vonage, fearing for it's life, has started a campaign called "Free to Compete" (http://www.freetocompete.com/) that is urging it's customers and supporters to fight the "wrongful" tactic of Verizon to shut them down. The claim, in short, is that Verizon doesn't like Vonage because they are offering competitive rates which lure their customers away and that Verizon likes to rip people off...

While I do like lower prices, I have to admit that Vonage's long term plan on making money is non existent and even without the lawsuit, I think Vonage would have been out of business within 5 years anyways. Their cost per acquisition is just way too high and they are not physically responsible for paying for the wires that supply our homes with Telephone and Internet, both services that Vonage could not exist without.

Your Cable provider and Verizon, have to charge higher rates because they are responsible for providing and maintaining these wires into your neighbourhoods and houses. It is for this reason why you have to pay more... Verizon has to pay for the infrastructure and they don't charge the higher rates because they want to be greedy pigs but because they have to!

There is no doubt that Verizon maybe a little greedier than they should be and that competition will benefit the end user, I just don't feel like Vonage's business model and pricing should be allowed considering all of the issues above.

I just read that Skype has struck a deal with Radio Shack to sell starter kits at their some 3,000 odd retail locations though-out the US. This makes sense as most of Skypes popularity came from overseas users and now in order to become profitable they need to get the big spending US market. The Kit that Radio Shck will sell comes with the software on CD, headphones, and 30 minutes of PC-to-Phone call time. Not sure of how much it will cost but it probably won't be more than $20 bucks.

I have to be honest I don't think it will sell that much but any sales this can produce is a plus for Skype who has yet to gain widespread acceptance in the United States.

Net2Phone tries this years back with the Yap Phones at Comp USA and that didn't do too well. I wish them luck but I would still recommend keeping their sales efforts online and considering they are now owned bye the powerhouse Ebay, I think new US customer acquisition should not be much of a challenge any more!

NetworkIP Prepaid VoIP Phone Service Targets International Distributors

NetworkIP has announced it will launch a prepaid Voice-Over-Internet Protocol (VoIP) telephone service for overseas consumers and businesses needing a local US-based phone number accessible from anywhere in the world. NetworkIP's Prepaid Broadband Phone Service will initially feature telephone numbers from rate centers across the United States with coverage expanding globally in the near future. Additionally, customers will have real-time access to account management features giving them the ability to monitor call history and account balance as well as recharge the account when funds are low. NetworkIP has also certified several industry leading hardware devices as being compatible with the product. "NetworkIP's Broadband Phone Service will enable prepaid distributors and resellers to tap into the exploding international VoIP marketplace," said Pete Pattullo, NetworkIP CEO and President. "This service underscores our commitment to deliver the most comprehensive prepaid and stored value products and services and the best connections for our customers." Available through prepaid resellers, NetworkIP Broadband Phone Service will be distributed, initially, in targeted Asian, European and South American cities.