The phone card industry's exponential growth is a direct result of the consumers need for cheap and convenient communications services. Pre-paid phone cards and monthly billed calling cards often offer considerably lower long distance rates than the more traditional phone services such as coin, cellular and collect calling. Additionally pre-paid phone card rates remain constant no matter what time or day the call is placed. Pre-paid cards were introduced in the U.S. in the early 90's and the large phone companies used traditional channels to market their cards to their customers. Until 1996 the phone companies made no significant effort to sell their cards as they already had a thoroughly established and entrenched profitable market. New products and concepts were also hard to sell to a public who already had a system that worked.
The advertising industry and a number of small telecommunications companies eager for some of the massive communications market first identified the power and "sellability" of the pre-paid card and before the big phone companies wiped the sleep out of their eyes the phonecard industry exploded. Mass production, the pre-paid card's relatively low cost and the ability to produce low denomination cards suddenly produced a new advertising medium. By printing a company name on a card or information commemorating a specific event, innovative telecom companies began marketing the cards as promotional items. Cards were sold as prizes or incentives and tourist souvenirs. They also became collectors items exactly like stamps and baseball cards due to their being run in limited editions. The retail phonecard had arrived and was turned into an expendable bulk consumer product like gum, toothpaste, film and razors. All this with the added incentive that you could, at very low cost, deliver a consumer message to the holder
who has to look at the card to make a call. Combine this with the fact that a calling card actually allowed you to call long distance cheaper than your regular long distance company and you have a winning combination. To add the icing to the cake you had a number of cards to choose from and you weren't bound to the captive suppliers of old.
The combined reach of the new markets expanded the distribution of phone cards from a few hundred thousand in 1992 to over 70 million in 1995. Calling cards are now sold through virtually every conceivable channel, from convenience stores and corner cafes to vending machines. Pre-paid cards now co-exist with and in many case have replaced collect calling and coin pay phones as the preferred method of placing calls. Calling cards are also extensively used to make local or intralata calls where the local phone company is unable to provide competitive rates.
Phone cards are here to stay. They are now being packed with additional services. Pre-paid internet accounts, e-mail services, paging, SMS messaging, voicemail, cellular phone service, international callback, and a variety of audio, text and digital information and entertainment services. WAP technology is here too.
The industry is still full of surprises and the first disposable cellphone cards are already edging into the market. This is a wafer thin phone card complete with a keypad, microphone and earpiece which you use as a combined phone/calling card. When its used up you throw it away and buy a new one!
