IISF 2004 HCD TASK FORCE

1
IISF 2004 HCD TASK FORCE

• DAY 2 Agenda
• Prepaid calling cards
• The Future of HCD

2
IISF 2004 HCD TASK FORCE

• Introduction
• At last years forum, the task force identified
  two main threats to
• Home Country Direct.
• These were
• Collect Calling and
• Prepaid Calling Cards
• As you would have seen from the Benchmarking
  survey a number
• of carriers have sub contracted out the Collect
  Type service to
• Collect Calling Companies.

3
IISF 2004 HCD TASK FORCE
Prepaid Calling Cards Q1 Are prepaid calling
card companies long term or short term
competition? Q2 How do they operate? Q3 Reasons
for using Prepaid Cards? Q4 How does HCD fit in
with the market place?
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IISF 2004 HCD TASK FORCE
On average, companies are making lt10 gross
margin
10
10
40
40
8
12 to 20
12
10
Carriers
Card Operators
Wholesalers
Retailers
Net profits for companies in this market range
from -5 to 5
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IISF 2004 HCD TASK FORCE

• Indirect costs
• Sales and Marketing
• Customer Services -usually via IVR
• Administration
• Card Manufacture / printing (approx. 7-10p per
  card)

• Key profit drivers are
• Significant minutes on cards not used -
  breakage
• Use of minutes outside core card route (these
  are priced high)
• Per minute or two minute price blocks
• Surcharges for Toll Free calling, Payphones
  and Mobile calls
• Geographic routing attracts mobile customers
  to use free minutes offered by mobile operators
• Daily/weekly service charges
• Connection charges

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IISF 2004 HCD TASK FORCE
VOIP Evidence suggests that Prepaid Carriers are
using VOIP to terminate calls outside the country
serviced. Tele 2 in Europe operate there
European operation out of Italy. They VOIP the
calls to a hub where a platform sits, before
shipping to the relevant destination
number. Next slide The information is taken
from a web site - operated by Telediscount
http//www.telediscount.co.uk/index2.php
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IISF 2004 HCD TASK FORCE
The 1p per minute supersale continues!Please
have a look at our latest bargains.Call any of
the countries below for just 1p per
minute!!ArgentinaGreeceIsraelItalyNew
ZealandSpainSweden All for 1p via access
number 0844 861 41 41 (1p/min) Many other
countries covered at 1p per minute BoliviaBrazil
ChilePeruVenezuela
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IISF 2004 HCD TASK FORCE
Prepaid Calling Cards Evidence suggests that
customers are quite happy to travel overseas and
purchase local prepaid calling cards.
Information from My Travel EMEA Sales
Director They offer In language prompts Value
for money in terms of calls - usually local IDD
rate Use and throw away Disadvantages Is the
rate you expect to pay the real rate? Operator
support in foreign language No refunds
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IISF 2004 HCD TASK FORCE
Finally I asked the question whether any of you
have gone head to head? Well..
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IISF 2004 HCD TASK FORCE
What is the future for HCD? Discussion
Questions? Who/what are the competition in the
HCD market? What barriers do we have to having
a successful product? What can we do?
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IISF 2004 HCD TASK FORCE

• What is the future for HCD?
• 2002 Riga Forum came up with the following
  parameters if
• HCD is to survive
• Protect the existing service
• Pricing - use mobile roaming charges as a
  benchmark
• Simplify dialling plans
• Additional billing options
• More creative/different settlement solutions
• New attractive services - passing of data
• Development of transit via other carriers

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IISF 2004 HCD TASK FORCE

• Protect the existing service Can we do anything
  else?
• Pricing - use mobile roaming Can we match or
  better roaming
• charges as a benchmark costs?
• Simplify dialling plans Use of UIFN/ETNS?
• Additional billing options How many more can we
  come
• develop?
• More creative/different settlement ?
• solutions
• New attractive services - data calling Yes
• Development of transit via Has the industry
  moved on?
• other carriers

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IISF 2004 HCD TASK FORCE
Yesterdays Output
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IISF 2004 HCD TASK FORCE

• Summary
• Do we accept that HCD is a nice product to have
  in our portfolios?
• Inexpensive to run
• Brings in cash revenue
• Adds to you IDD minute targets
• Good for the customer
• However,
• Can we compete with in country products
  - Unlikely
• Can we compete with mobiles - Possibly
• Will we be able to utilise VOIP early
  on - Unlikely

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IISF 2004 HCD TASK FORCE
Summary We have a wrap up session on Friday. I
will prepare a summary of the two sessions. We
have probably painted a very dark and bleak
picture, but that is the harsh reality of the
current situation.