Saturday, July 28, 2007

Phone Cards for International Travel

Most seasoned international travelers pack a couple of phone cards before leaving home because they know that it is difficult to find another means of making international calls from overseas that offer quality, reliability and low cost. Phone cards also offer convenience since they can be used from nearly any phone including phones in airports, hotels or even pay phones on the street. They also are a good way to budget communication expenses while on a trip. Most travelers want to call home during their journey and phone cards offer a low cost way to keep in touch.

It is important to shop for the right phone card before making a purchase. Most phone cards will not work from every country so shoppers should check the availability of access numbers in the countries they plan to visit to assure the card can be used. There are a few phone cards that stand out from the rest when it comes to calling the USA from international locations. They offer low cost, high quality and can be used from a wide variety of countries. The following are a couple of suggestions.

  • Golden Lotus Phone Card - This card has high quality and great rates from many diverse locations. Travelers to Europe, Japan, Mexico, Brazil, Turkey, Israel and several other international destination should consider using this phone card.
  • Fast World Phone Card - This is also a high quality phone card. It generally has higher rates than Golden Lotus but can be used from more locations. It is likely the best phone card for making calls to the USA from Russia. It can also be used from countries like Saudi Arabia and Kazakhstan where it is difficult to find phone cards with high quality and reasonable rates.

Of course there is always the AT&T Phone Card. It has high quality and can be used from almost any country but rates for making calls to the USA can be very expensive when compared to cards like those listed above. However, in some cases, the AT&T phone card is the only choice.

One important tip for international travelers. It is a good idea to purchase phone cards before leaving home. Many on-line phone card merchants have sophisticated fraud detection programs that may block a credit card purchase from a foreign country or require some type of time consuming verification process. Also, it is much easier to shop and compare calling card features and rates from the comfort of your own home in your own language.

Sunday, July 22, 2007

Phone Card Fees: Maintenance Fees

Most people know that phone cards add fees to the advertised rate per-minute so they shop for phone cards with minimal added fees. In most cases this is a good practice but there are some exceptions. Phone card maintenance fees offer a good example. Many phone card companies charge a maintenance fee so they can advertise a low per-minute rate on calls and still earn an acceptable margin. Customers who hold a phone card for a defined period of time will be charged a maintenance fee in addition to the charges paid for each call.

Many consumers feel these cards should be avoided but they can actually offer good value. The key here is that a maintenance fee is assessed after a defined period of time. The clock normally starts ticking when the card is first used and the maintenance fee is charged after a period of time that is typically one week, two weeks or one month. The trick is to not hold the card for the period of time required to trigger a maintenance fee charge. If the card is fully used before the maintenance fee period ends, there is no added charge. Many phone cards that charge a maintenance fee also have relatively low per-minute rates. Therefore, a consumer can purchase such a card in a small denomination, use it before the maintenance fee period ends and get a good deal.

A good example is the Golden Lotus phone card. It charges a weekly maintenance fee of $0.99. However, it also has some of the best rates to many locations and is rated very high for quality by customers. It also comes with features like PIN Free dialing, on-line call history and speed dial that are not standard with most phone cards. Consumers can call India from the USA with the Golden Lotus card for as little as 4.3 cents-per-minute. People who call India know this is a very cheap rate for a prepaid calling product that offers high call quality.

Consumers should not automatically shun phone cards with added fees. They should understand and analyze the fee structure so they can make an informed choice. They should, however, avoid phone card marketers who do not fully disclose all fees in an understandable manner.

Friday, July 20, 2007

SunRocket VoIP Alternatives

SunRocket VoIP finally notified customers today that it will cease operations and they will need to find another phone company. They indicated that future service is uncertain so customers should immediately find alternative phone service.

They will, of course, not refund any of the money prepaid by 1000's of customers for their VoIP Service. They did recommend two alternative providers, Packet8 and Teleblend, who are providing special deals to SunRocket customers. However, neither of them will honor SunRocket VoIP contracts. SunRocket likely has a deal with these companies and will likely receive a commission for customers who open accounts with one of the recommended companies. We have a SunRocket phone and will not switch to one of these companies because we feel we have already given them enough money.

There are plenty of other VoIP service providers not affiliated with SunRocket VoIP that are also offering deals. Two of these are XVoice, which happens to have one of the best international calling plans, and Zingotel. Use coupon code Zingo1007 for Zingotel and get one month of free service and free shipping until the end of July. Avoice charges $22.99 per month for their international plan and Zingotel charges $19.95 per month for unlimited calling in the USA and Canada. Packet8 charges $24.99 per month so both of these other options are cheaper.

We are planning to purchase service from one of these companies but will stick to a monthly plan for now. We expect other VoIP providers will run into financial difficulties and don't plan to have any prepaid service with the next company that goes broke. We advise others to do the same.

Thursday, July 19, 2007

SunRocket VoIP Crashes & Burns

As reported by the Washington Post (July 19, 2007) and others, SunRocket VoIP decided to pull the plug on their operation earlier this week. It has also been reported that their CEO, Lisa Hook, resigned last Friday. We reported a couple of weeks ago that they were having financial difficulties but had no idea the crash would come this soon. SunRocket had more than 200,000 customers so they were a large player in the VoIP startup business, second only to Vonage. Many customers, including us, prepaid for services so they (we) will likely lose whatever prepaid time remains. Thousands of customers have apparently already lost service but our SunRocket phone is still working this morning. SunRocket VoIP was an aggressive marketer but it seems they had pretty poor financial management, reports indicate they burned $80 million in rocket fuel over the past two years. A few venture capatalists also got burned.

SunRocket has not yet notified customers of anything. Their website is still working and it seems they are still functioning as normal. However, they have ceased accepting orders and it is only a matter of time before their phone service will completely stop. So what does a former SunRocket customer do? It seems they will need to forget the money they spent on their SunRocket VoIP service and find a new VoIP provider? That is, if they still want to rely on VoIP.

Many companies are lining up with special offers for former SunRocket customers. One such company is Zingotel, they are offering the following.
  • One Month of Free Service
  • Unlimited Calls in the USA and Canada
  • A Local Number in any North American City.
  • Free Linksys 2100 VoIP Adapter
  • All Features: Voicemail, Caller ID, Call Forwarding, 3 Way Calling and more.
  • Transfer of your existing number is possible in 46 States.
  • Free Shipping or $10 off any service package through July 31, 2007.

Use coupon code: zingo1007. Visit Zingotel to sign up.

Zingotel has been around a while and offers unlimited calling in the USA and Canada for only $19.95 per month. We will likely change to Zingotel and avoid other prepaid options for now.

Sunday, July 15, 2007

International Callback Phone Service

International callback is a relatively popular method of making low cost international phone calls from countries where telecommunication services are very expensive. The phone service in many of these countries is controlled by a monopoly phone company so the cost of making international calls using the local service provider or even phone cards can be exorbitant. International callback phone service is far cheaper since it essentially by-passes the high cost local service provider and routes calls through a lower cost third country. This can be done using different techniques but the results are the same......international callers can save a lot of money on their calls by using international callback.

What we refer to as traditional callback phone service is used by dialing a special phone number in another country that has cheap telecommunication services. This is often in North America or Europe. The caller lets the phone ring one time than hangs up the phone. The special phone number is actually a computer that recognizes the caller from their phone number (Caller ID) and places a call back to the caller. The caller than answers the phone and finds a dial tone. The caller can then place a cheap international call to any location in the world. The call is routed over the lower cost phone system that may be located in a third country. The cost of the call is actually broken into two "legs". One leg is the cost of a phone call from the third country to their location and another leg is the cost of a call from the third country to the destination they are calling. However, even with two legs, the cost of making an international call using international callback is generally far cheaper than making the same call using a high cost, monopoly service provider. The cost of an international call from Kazakhstan to the USA is a good example. A call from Kazakhstan to the USA will cost anywhere from $0.50 to over $1 per-minute using phone cards or the Kazakhstan phone system. Using international callback the same call can be made for less than $0.10 per-minute.....a very substantial savings.

International callback is normally a prepaid service and there are several service providers and different types of products. One potential problem is that traditional callback is often blocked by high cost countries in order to protect their monopoly phone companies. It can be blocked fairly easily since a call is triggered by placing a phone call to a computer located in another country. The computer recognizes the caller using Caller ID technology so all a country needs to do is block Caller ID and they have blocked traditional callback. However, there are other callback services that are much more difficult or impossible to block. Two of these are often referred to as Web Call or SMS Call. Using Web Call a callback call is triggered using a specially formatted e-mail message while a simple text message from a cell phone is used to trigger a callback call using SMS Call. Both of these products are gaining popularity since they offer a convenient and cheap means of making international calls from high cost countries.

Friday, July 6, 2007

Will SunRocket VoIP Bite Moon Dust?

SunRocket VoIP advised their affiliates yesterday (July 5, 2007) that they were discontinuing their affiliate program managed through the LinkShare network. They also advised that they have not paid affiliate commissions since March and they did not know "if or when payment would be received." Is the end of SunRocket VoIP near?

An Affiliate only gets paid when they sell a product so Affiliate marketing is a very cheap way for a company to market products on-line since it is the lowest cost option. SunRocket has been offering sweet deals to affiliates and new customers, commissions of up to $100 per account for affiliates and up to 3 months of free service to new customers. It seems the deals may have been too sweet and SunRocket likely has a severe cash flow problem. A company would usually discontinue or reduce their high cost marketing channels first, not their low cost one, so the fact they cancelled their Affiliate marketing program is not a good sign. It seems that SunRocket needs a cash infusion or the next step may be bankruptcy.

What will happen to a customer's VoIP service if SunRocket goes bankrupt? It is hard to say at this point. Many SunRocket customers prepaid their SunRocket service for 1 year because they offered a special of $199 per year and 3 months of free service. So many customers may simply lose their VoIP service and the unused portion of their money.

Are there lessons to be learned here? Yes, at least a couple.

1. The VoIP market has been very competitive over the last couple of years and margins have been low. VoIP service provider's have spent a lot of money on advertising and promotions in order to build a large customer base in order to reach critical mass and reap large profits in the future. This strategy does not always work and it tends to favor the large well financed companies. There will continue to be a consolidation in the industry as weaker players continue to fail and larger, well financed companies continue to gain market share.

2. A consumer should be careful when they choose a VoIP Service provider. Maybe it is not a good idea to prepay for a long period of time in order to get dirt cheap service today This may actually be a sign of financial weakness because a company offers these deals in order to improve short term cash flow.

3. The same can be said for all prepaid services. It is a good idea to not pay them to far in advance unless you know the financial condition of the company.

Remember, even large well capatalized companies can fail. Remeber Enron? Could this happen to Vonage? Of course it could. One thing is certain, there will be more surprises in this industry in the future. There are simply too many players and the VoIP industry needs to consolidate.

Sunday, July 1, 2007

Phone Card Affiliate Programs

Over the past few years we have worked with several different phone card and telecom related affiliate programs. Many will pay affiliates a one time commission on a customer's first purchase or re-occurring commissions on sales through a link from the affiliates own website. However, in either case, a customer will likely return directly to the phone card merchant's website to make subsequent purchases and by-pass the affiliates website and the affiliate will not earn a commission. In other words, the affiliate will find customers for the phone card merchant and earn a small one-time commission. A very cheap method for phone card merchants to build a customer base while getting free advertising. A very poor deal for affiliates who spend money on advertising.

The phone card business is low margin and the only way to earn a significant income is by selling a lot of cards through re-occurring sales to a large customer base. The cost of gaining customers is high and affiliates will generally lose money if they only get commissions on first or one-time sales. For this reason, phone card affiliate programs with this type of commission structure should be avoided.

The first thing to look for when evaluating a phone card affiliate program is the ability to earn re-occurring commissions. If a program does not offer a means of earning re-occurring commissions than it should not be considered. Top quality phone card affiliate programs will require customers to register an account and the affiliate that introduced the customer will earn commissions on re-occurring sales made through that account forever, period. It should not matter how a customer arrives at the phone card merchant's website.

The second thing to look for is a product that sells well. The best products are those that are relatively easy to sell the first time and customers continue to use so there are a lot of repeat sales and re-occurring commissions. We have sold phone cards in the past that sell well the first time but customers rarely repurchase. We usually drop these products after test marketing them for a few months. This pattern suggests the product is low cost but also poor quality. Phone card customers tend to be price sensitive but they are also quality sensitive. We find that most customers are looking for what we call value which we define as good quality at a fair price. We also find that many phone card customers are loyal so, if they find a product they like, they tend to make repeat purchases rather than risk buying something new.

Successful companies will treat affiliates like business partners by offering promotions to help their affiliates build their customer base. This is a win-win situation for both the phone card merchant and the affiliate.

We think there are two phone card affiliate programs that stand-out from the rest. These are Tel3Advantage and the pushline. Both of these programs treat affiliates as business partners. They do this by offering frequent promotions and by rewarding affiliates for building a large customer base by paying relatively high commissions on re-occurring sales. They are forward looking companies who understand that their success depends on the success of their affiliates. That is what affiliate marketing is all about.