Posted: 08/2000

Whole New Ball Game
By James R. Dukart

Today’s prepaid services are about
a lot more than phone cards for voice calls.

Gone are the days when prepaid telephony was a matter of buying access, printing phone cards and calculating time and distance usage against those cards.

Today’s prepaid service providers are rolling out new, advanced products and services. Prepaid platforms today must meet the demand for these new services, which in some cases offer communications capabilities that seem only distantly related to the old prepaid card.

“It’s a whole new ball game,” says Shelton Glenn, sales manager for Telephony Experts Inc. (www.telephonyexperts.com). “Voice calls are becoming less our main business, and long distance is by far the minority service more and more.”

Glenn says the new sweet spot for prepaid is the combination of voice and data.

“When we sell a platform to one of our customers, what we see is that they have to do what their competition is doing, which is provide fax mail, voice mail and the ability to sell a lot of different services,” he says.

He is not alone in this observation.

“Our customers who own equipment do a little bit of everything,” says Brett Parkinson, vice president of business development for the World Access Switching Division of NACT Telecommunications Inc.
(www.nact.com). “They are the ones beating the streets. What we have geared our equipment around is that they won’t have to say ‘no’ to anyone. They are retailing prepaid, getting into 1+ numbers, becoming carrier’s carriers, doing direct billing, wholesaling services and wholesaling different products.”

And the manager of
AIN/ATM (advanced intelligent networks/ATM) products for Siemens Information and Communication Networks
(www.icn.siemens.com), Ray Shedden, says his company’s platforms are being used to sell “sizzling, state-of-the-art, advanced intelligent network services.”

These range from hybrid promotional cards granting minutes based on advertiser and product tie-ins to a “parent control” system that lets adults manage teens’ phone usage.

“The margins are getting so low in raw transport that you have to go with advanced services,” Shedden says. “Everyone can see that the real money is not going to be in voice, so they have to offer services that have a more value-added component.”

Evolution to Advanced Services

“This is an evolving industry, and what it’s evolving to is advanced services,” explains Jeff Porter, vice president of sales for Voiceware Systems Inc.
(www.voicewaresystems.com). “Many times a client doesn’t even have to ask for it; the systems already come with voice mail or other services attached.

“Credit card activation and reactivation is another example. It’s all a way to not only get new customers, but to also retain the ones you have, give them a reason to reuse the card and stay on your system,” Porter says.

An interesting example is Siemens’ “Parent Phone Control.” It is part of what Shedden calls the “self-service heaven” of new prepaid services.

Parent Phone Control uses a live web interface to let parents control how, when, where and even in what way their children use prepaid cards. In the case of a parent with teenagers, a card might be programmed to limit calls to certain hours of the day, or to block out certain incoming or outgoing
numbers. Parents could even use additional calling card minutes as a type of weekly or monthly “allowance.”

Parents who really want to get on their teens’ good side could pick up a prepaid card sponsored by someone like MTV. The MTV cards are being rolled out by Siemens client AxisTel Communications Inc.
(www.axistel.com). They let users make standard prepaid calls, but also have MTV numbers so the caller can listen to music or hear music news.

Other “hybrid” card products that Shedden mentions include a casino cash card in Las Vegas that rewards gaming activity with free phone minutes, and grocery store tie-ins that do the same for food purchases.

In all cases, the key is that prepaid phone minutes are becoming something of their own currency, purchased by marketers and large companies and distributed as rewards or incentives to consumers, he says.

Platform providers must recognize this and build systems to address the needs and requirements of service providers’ larger prepaid customers–marketers, corporations and advertisers–which are quite different from the needs of an individual purchasing a small-denomination prepaid card for a business trip or family member.

“The hottest thing I am seeing right now is promotional prepaid,” says Fabio
Tylim, director of the Americas for Sherman

Oaks, California-based APEX Voice Communications (www.apexvoice.com).

“The minutes are being sponsored by an advertiser who is willing to pay in order to get some very specific ears.”

With the first use of an advertiser-sponsored card, users are asked to provide basic demographic information. For subsequent card use, callers hear a brief ad targeted to their demographic.

“Philip Morris or Gap Jeans have specific markets they want to reach with their ads,” Tylim says. “They think it’s great because they are getting specific targeted contacts. For the service provider, instead of getting 5 cents per minute, they may get a dollar or more per ad played.”

Consumers see it as a great deal, because what they remember is the free 15-minute phone call, making it more likely they will come back to the network the next time they want to make a call.

Symbio-Tech Inc.
(www.symbio-tech.com) president Grant Simpson says one of his customers offers this type of prepaid phone card tied to auto racing, using fan interest to rev up profits.

“The first time you use the card, the system welcomes you to the organization and asks you to enter the name of your favorite driver,” Simpson says. “The next time you call in, you hear about how that driver did in his latest race, or get updated season statistics.”

Another example is a service provider working with Harris polls, he says. Consumers hate answering political polls from telemarketers, but will gladly use a sponsored prepaid calling card to call in, answer a few poll questions and get 15 or 30 minutes of free phone time.

The polling company considers it a fair exchange, getting poll results in an efficient and economical way, he explains.

Happiest of all is the service provider who gets paid a flat amount for each poll answered, an amount greater than it could charge for prepaid per-minute service.

Glenn says Telephony Experts has discovered opportunities in the technical support industries. Computer makers and software companies are using prepaid phone cards to control paid telephone customer support for products. A prepaid card with 100 minutes of support time can be shipped with almost any technology product.

Technology companies find such cards reduce incoming 800-line charges and are met with far greater consumer acceptance than customer support via 900-lines or regular toll charges, he adds.

Platform Power and Flexibility

To handle this growing range of prepaid services and products, platforms must be robust and flexible. Simpson says a key is to allow customers to do their own call-flow scripting in order to offer a wide and ever-changing array of different products and services to different customers.

“Service providers and their customers need to be able to customize their scripts,” Simpson stresses. “To the outside world, it might look as if a service provider is offering the services of 75 different companies, but they have to be able to do that off of one
platform.”

Platforms must allow for point-of-sale activation (POSA) where service providers and customers can activate and recharge cards on the fly, Simpson adds.

NACT’s Parkinson says POSA is one of the top trends in prepaid, and that platforms must be flexible enough to accept activation and recharging via whatever input mechanism a retail merchant prefers.

“Retailers don’t want to bring in a bunch of new hardware,” Parkinson says. “You have to let them do it through electronic entry of a PIN number, programming a cash register key or verification through a credit or debit card reader, however they want.”

Just as important as flexibility is scalability, he says.

Prepaid platforms must handle millions of cards at a time, and ramp up quickly to meet increased demand that might be tied to special promotions.

“If in the past you were handling 1 [million] or 2 million cards per month, now you have to be able to handle 10 [million] to 15 million,” he says.

The same platforms must provide customizable voice prompts in multiple languages in order to let service providers and their customers create a unique look and feel to promote individual brands.

Another critical capability is to tie a prepaid platform to websites, vendors say.

“Six months ago, 2 [percent] to 5 percent of our clients were interested in having websites where phone card users could call in and get their account details,” Simpson says. “Today, it seems everybody wants to do it.”

Erwin Hunter, senior product manager for AIN products at Siemens, says service providers can use the web for batch distribution of PINs and for low-cost activation or recharge.

“E-commerce direct to consumers saves service providers money in at least a couple of ways,” he says. “First, you cut out the distribution charge. You also don’t have to physically print cards, you can just sell the 800 numbers and PINs over the Internet, and let people print and use them as they need.”

Shedden says Siemens’ use of the Internet for reporting and product/service management may be an even bigger opportunity. He cites AxisTel as an example. The Siemens platform lets AxisTel executives get up-to-the-minute data and reports on the number and type of cards that are out, number and type of customer support requests, activation times, sales figures, and a host of other reports.

“They can look at their business reports in real time, look at the health of their network, at profitability,” Shedden says. “They might have defined a product that did not work as they had planned, so they can change it. If they have something that is working for them in one place, they can duplicate it somewhere else. The goal is to be real flexible for accommodating business needs and opportunities that cross your path.”

Parkinson says real-time business data reporting and analysis is a crucial feature in prepaid platforms.

“People are looking at what their profit and loss is,” he says. “They want their call detail records, and they want their retail rate, the retail charge maintained and the ability to re-rate to what their carriers would charge on both the inbound and outbound side. They have to be able to pop out a profit and loss statement when they need it.”

Telephony Experts’ Glenn says it more directly: “We are a software company. As soon as we put the web-based front end on our switches, it changed the dynamic. It allowed the customer to go to a website and charge a card, and as soon as they saw that, they started to think about what else they could do with the same card.”

Today the prepaid industry is about enabling communications services on a prepaid basis, many focused on data rather than voice, Glenn says.

“We are starting to see that data is the real money-making play. It’s sort of gotten to the point where we say, ‘Oh, you want to make a voice call? We can do that too.'”

James R. Dukart is a freelance writer based in Minnesota. He can be reached at
[email protected].