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Prepaid Phone Cards Give Hope to Struggling Telecom Industry

The current sales of prepaid phone cards are rapidly increasing at double-digit rates. Prepaid calling cards are being purchased not only by low income households and small businesses. Rising prices of commodities and instability of the economy are just few of the reasons that make the use of prepaid phone cards a practical choice by almost everybody. Even wealthy families and big corporations have been washed away by the current trend and cannot help join the bandwagon.

According to the recent report released by market research company called the CPR Group, almost 55 percent of the highest income households have utilized prepaid calling cards, as well as 50 percent of the lowest income households.

The prepaid phone card started with the goal of satisfying the demand for cheaper call rates in the height of increasing costs of telephone subscriptions. The industry targeted families in low income brackets and also starting businesses who do not have regular phone service or find it hard to shoulder expensive telephone services. It also aimed to accommodate immigrants who are always on the go by offering them features that allow use5A8rs telephone accessibility in every corner of the globe at a very cheap price.

Prepaid calling cards can be purchased not only in convenience stores but also in the Web. Its increasing sales and popularity have been said to be the only light in the struggling telecom industry and have been hoped to prevent the industrys current downtrend.

With the expanding prepaid calling card market, there had been increasing competition between key players and infant prepaid calling card companies. This competition led to the decreasing calling rates, which have fallen dramatically to mere pennies per minute.

An example of this decreasing trend is the $10 phone card by Nivatel Communications. This card gives its users 400 calling minutes to Germany, 300 minutes to Brazil, or 500 minutes to Singapore. Sometimes the price of these cards can be further bargained to $9 or even $8.

Prepaid phone cards have been hailed as big moneymakers, even during its infancy. Experts say that these cards continue to be the most profitable segments of the dwindling telecom industry.

IDT, a huge corporation, recorded 30 to 40 percent annual growth in the sales of prepaid phone cards. 70 percent of the companys revenues is said to be coming from sales of prepaid phone cards. In July alone, it has sold 18 million calling cards.

Problems with quality of phone calls made through prepaid phone cards 546had already been resolved with technological developments, greatly reducing echoes and delays in calls.

These technological advancements in telecom industry have also made possible the entry of small businesses in the prepaid industry. Instead of building their own networks, smaller companies can just lease lines from big telecom companies at a low cost.

According to Toni Kumar, president of Roslyn Heights, New York-based Nivatel which started as a phone card company, Rates are down every month, every year. Everybody is giving crazy minutes in the market. I do not know how they can afford it.

Victor De La Cruz, program leader for research company Frost & Sullivan, answered this and said, The prepaid price is dropping, but there is enough demand to keep profits coming.

posted by blogs71770 @ 5:34 PM