Thursday, October 9th 2008

10:21 AM

Canada Calling Card

Mood:
Music:

Calling card has been a long standing business in Canada, since the deregulation in the long distance market in 1980s. Coupled with flux of immigrants and boom of internet, Canada phone card business has undergone a curve of early adoption (1990s), mass reception (2000-2002), and recession (2003-). I use the word “recession” as the calling cards as a whole are facing strong competition from alternative products like Vonage, Skype, who developed millions of customers from 2003.

My view of the calling card business is pessimistic, although they are still widely popular among many ethnic users, they are facing some serious problems, unless these problems are being addressed and solved, they will continue to lose market share week after week, month after month, and year after year.

Problem 1 – Distribution Channel verus Direct Sales

Before the cards can be sold to consumers, they first need to be physically produced in plastic cards, then shipped to all the retail stores, then sold to buyers in cash. In the internet era, all the distribution networks can be avoided, a service provider can simply sell calling cards on the web – because the critical part of a card is the PIN – and the PIN is just a series of numbers that you can deliver to emails or SMS electronically. Actually, in Canada there are some electronic calling cards (http://www.vbuzzer.com/calling_card.php ) like Vbuzzer. Compared to the web to consumer business model, traditional calling card will have a hard time to compete as their networks are indirect and more expensive – which means they can’t compete in price.

Problem 2 – Hidden Fees

Every time you look at a calling card poster, you are gonna learn a few more tricks how to apply hidden charges – connection fees, no connections fees but administrative fees, higher price after 3 minutes, per minute billing, or very early expiry days etc. They reflect the harsh business environment of the whole industry, if they sell in straight terms, they will look very expensive, which means nobody will buy the cards, so they have to cheat…

In contrast, in the direct selling mode, for example, web to consumers, cheating is not popular, the vendors avoided a lot of expenses in the distribution channel so they still do fair business.

Problem 3 – Inconvenience of use

Of course, when you need to dial a 10-digit access number, then a 9-digit PIN, then another 10-digit or 13-digit international phone number, the whole process isn’t very pleasant, right? Not to mention that you have no call history that you can check up, no bills to show your usage, etc. It is okay when you don’t have other alternatives to save money, but for many people it becomes increasingly bothersome to use the product.

Problem 4 – Competition

This is big, and real. Whenever I open a web page I can see Vonage ads, Skype ads, or somebody else’s ads. A lot money has been thrown into the internet phone business, or pc to phone business, and the money has helped developing millions of customers, this means calling cards have lost a few million customers in the last few years. I try not to be too pessimistic, but I can’t paint a brighter future for the industry when it faces such strong competitors.

Maybe I’m biased, or maybe I’m simply not possessing the knowledge the industry players are possessing, nonetheless, I can’t see any light in the tunnel for the calling card business in Canada.

Here is a video to explain Canada Internet Phone.

http://www.youtube.com/watch?v=SbLqydGj3oo

For additional information, please visit Vbuzzer blog about Canada Calling Card.

http://www.vbuzzer.com/blog/voip-service/calling-card-canada.html

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