Prepaid phone cards starts price war
Corner store flyers promoting international calls for as little as half a cent a minute are drawing an increasing slice of international phone traffic as consumers shun major telephone companies in favour of prepaid cards.
Optus cut its international call rates for 10 countries to 9 cents a minute - a drop of between 50 to 85 per cent - citing the competition from calling card rates as the reason. Telstra has blamed a 12 per cent fall in international call minutes and 13 per cent drop in international revenue this year on customers "migrating to aggressively priced prepaid calling cards", according to its annual report.
The Association of Convenience Stores said calling card sales had doubled and accounted for 10 per cent of sales for the average store. "Forty per cent of the international market is now calling cards," said a telecommunications analyst, Paul Budde, who estimates card revenue hit $200 million this year. This was "a double whammy for Telstra and Optus" because as card sales rose, international revenue was falling. "The calling card market has moved beyond the discount market and a lot of business people are now using cards," he said.
The acting managing director of consumer and multimedia at Optus, Scott Larson, said the new Optus rate "starts to compete favourably" with calling cards and calls made over the internet. "Customers no longer have to experience the inconvenience of purchasing a calling card, worry about congestion at peak periods or paying up front and potentially waste unused call minutes," he said. But the new rate was really aimed at taking home phone customers from Telstra, he added.
A Telstra spokesman said the Optus offer tied customers into a 12-month plan. He said Telstra's Homeline Plus plan charged $1 for 10 minutes to six countries, including Hong Kong and Britain. More than 30 calling cards are sold through 4000 newsagents and convenience stores via the Ezipin electronic voucher system. The marketing manager of Ezipin, Rick Arden, said some companies marketed cards targeted to particular countries. But he warned of some smaller players "where the service is not that great and you can't get through all the time".