NetworkIP Blog

Tomorrow AT&T will release its second-quarter earnings. It is projected that AT&T will fall short of their projections for this past quarter & many suspect that AT&T will lower expectations for 2008 as a whole.

AT&T, along with other major phone companies, has seen a significant decrease in landline services in Q2 of 2008. The Wall Street Journal reported yesterday that the phone companies used to be largely insulated from economic downturns because most consumers considered their home service a necessity. However, now that over 80% of Americans own cell phones, the home telephone isn’t the necessity that it used to be.

It is my opinion that many Americans realized long ago that the home phone wasn’t a necessity, however, we choose to avoid the hassle of calling up the phone company & turning off our service & then having to inform all of our family & friends that we now only use our mobile phone. Now that the price of gas is $4 plus dollars we are willing to accept these hassles & actually disconnect our home phone services.

The disconnecting of home phone services also points to a number of other realities. First, the wireless networks have improved such that we aren’t worried so much about poor quality during our phone calls. Two, the cost of mobile phone services has decreased significantly & the notion of domestic long distance no longer exists. Three, the mobile phone has become such an integral part of our daily lives that we always have it with us & it is no longer something that we only use when we are away from home.

As we see a decrease in home phone services I suspect we’ll see an increase in business for prepaid calling card providers. Regardless of how much better those mobile phone calling plans have gotten, it is still quite difficult to find a good international long distance rate for mobile phone calling plans. Prepaid calling cards offer a great alternative for consumers that are looking for a low cost & good quality international long distance plan. With many prepaid long distance services offering PINless* dialing features & auto-recharge options it has become more convenient for users to gravitate to this type of service. These services have become practically invisible to the consumers using them.

I suspect that over the next 5 years we will continue to see the number of home phones diminish. Not only will more Americans cancel their existing services, but younger generations won’t even bother having them installed. Mobile services will continue to expand & until mobile international calling plans improve the prepaid long distance businesses will prosper.

* PINless dialing is a convenient feature that allows you to register your phone number(s) at the time of purchase so that you can place long distance calls without having to dial a PIN.

My summer conference schedule so far includes the Prepaid Press Expo in Las Vegas in August & Mobilize in September in San Francisco.

NetworkIP is a regular at the Prepaid Press Expo. We’ve supported this event for many years now & it’s a great opportunity for us to get out & share with our clients what we are up to, what trends we see occurring in the prepaid industry, & what we plan to do to ensure our clients can take advantage of those new trends.

This will be our first year attending Mobilize, in fact I believe this will be the first year this show is held. We have the highest respects for the folks at GigaOm & believe they have pulled some of the brightest people together for this conference. We’ve been following the mobile space & working more closely with partners in this space this year. This event is sure to shed some light on where things are heading, or at least where we think this space is heading. With more mobile devices becoming open & network speeds increasing this is an exciting space for us to be involved in.

About the Prepaid Press Expo:

The prepaid industry has grown in three distinct branches – calling cards, wireless, and gift cards/alternative payments. These three diverse sectors converge at the retail level, but are still approached as different industries. No trade event today features the convergence…until now!

About Mobilize:

Mobilize is a conference developed by award-winning technology writer Om Malik to inform the entrepreneurial community about the opportunities present in the next phase of the mobile web. Working with Om on the program is GigaOM’s resident technologist Surj Patel.

Industry-leading speakers will share their unique perspectives with Mobilize participants to guide them through the emerging opportunities in the next phase of the mobile web. We will feature the best technologies, the best thought leaders and the most innovative and inspiring startups.

As a leader in the prepaid industry we realized the value of our clients building successful brands long ago. We take every opportunity to advise clients on what to do (brand-builders) & more importantly what not to do (brand-killers) in order to build a strong & successful brand for their product. We even went so far to develop a 3-part Branding Toolkit that provides our clients the tools & techniques to manage, measure profit, & protect their prepaid brand.

You can download NetworkIP’s 3-part Branding Toolkit from our website.

At NetworkIP we make it a point to continue building our knowledge base & sharing with our clients what we have learned & what others are saying about brand building. Just yesterday we caught a post from Om Malik describing the frustration he has with advertising being every where. Om initially opened with Delta’s plan for printing advertisements on their boarding passes & then he lead to talking about how IDT is going to begin inserting advertising messages on their prepaid calling cards. IDT, using VoodooVox as a technology provider, will play an advertisement to consumers based on the consumer’s demographic profile (where they are calling from or to) when making phone calls. While there may be additional dollars for IDT to gain from advertisers; will this strategy hurt their brand & ultimately generate in fewer prepaid calling card sales?

Before you rush to do the same as IDT is doing, consider for a moment what this will do to your brand’s image. How will your customers react to having advertisements played to them when making phone calls? Will you be able to offer your customers better rates because of the additional revenue made from the advertisements? Will the advertisements themselves offer value to your consumers or simply be a nuisance that they will not put up with?

We advise making sure you can answer these questions before doing anything to risk your brand. Brand awareness creates demand for your product & your brand can be your company’s most valuable asset!