Maria Hernandez, the manager of Bodega Yakimex, re-stocks store shelves with long-distance phone cards last week in Yakima. The store stocks 70 different types of phone cards. All phone cards are not created equal, and some cards are not the good deal they seem.

Viscom International has targeted three areas for expansion this year.

Salt Lake City, Kansas City and Yakima.

That’s right, Yakima.

For the Atlanta-based company, the Valley is the perfect market for its sole product: a prepaid card to call Mexico.

The boom for domestic prepaid phone cards — which provide allotted minutes to call long distance — has passed with the rise of cell phones with free long distance.

But there’s still a huge market for international calling cards. And much of that is from new immigrants who want to call relatives back home, said Fedor Smith, vice president of Atlantic ACM, a telecommunications consulting company.

Immigrants helped Viscom bring in $14 million last year. But its still a small company in the phone card market. A competitor, IDT, reported revenues of $2.47 billion last year.

The Valley’s large Mexican farm-worker population attracted Viscom, said Christina Steiner, Viscom vice president of marketing. The company focuses on second- and third-tier cities with large Mexican populations, where advertising costs are less expensive.

«As a market, it’s great to have a focus,» she said. «It’s easier to really be able to understand the nuances of your market.»

GORDON KINGYakima Herald-Republic

Calling cards come in a variety of shapes, sizes and colors with each carrying different plans and costs.
Many residents find phone cards a cheaper way to keep up with friends and family.

«On my cell phone it’s really expensive,» said Pamela Ramirez, a Yakima resident who began using cards five years ago when she moved here from Mexico.

With a $5 phone card, Ramirez said she can talk for about 6 hours. It would cost her $72 to talk that long on her cell phone.

The Bodega Yakimex on North First Street sells about 3,000 cards a week, said store manager Maria Hernandez.

Phone cards are also popular at Fiesta Foods, a chain with a heavy focus on Mexican products. Customers at its Sunnyside and Pasco stores receive a 5 percent discount on phone cards, said owner Craig Gaylord.

Gaylord uses them himself to call friends in Mexico.

«The difference between (phone cards) and long distance (charges) is unbelievable,» he said.

There are so many competitors for the market that prices have reached rock bottom in an attempt to attract consumers.

«It’s very much a price-centric market,» Smith, of Atlantic ACM, said.

The front wall at the Bodega Yakimex’s customer service counter is covered with posters for different phone cards. Some have quirky names and pictures and bold advertisements promising hundreds of minutes — one even promises a 1,000 minutes for $5.

But it’s questionable whether every one of the cards can keep their bold promises.

Some cards don’t mention that many minutes are lost paying for a variety of fees, said Joe Ridout, a spokesman for Consumer Action, a nationwide nonprofit consumer education and advocacy group.

There can be fees to connect calls, for card maintenance, for taxes or for using them at a pay phone. Once those fees are tacked on, consumers may end up only getting fraction of the minutes they’ve been promised, Ridout said.

One Spanish-speaking customer reported that he was only able to speak for 25 minutes on a card that promised 90 minutes, he said.

Other cards may route calls via the Internet or second-rate phone carriers that can reduce call quality.

«The quality can vary, from very clear phone calls to ones that are very poor,» Ridout said.

Consumers should buy one card and try it out, he said. They should also search for a customer service number. If there’s one, they should call and ask for a full description of fees.

«There’s a lot of solid and reputable companies,» he said. «You just have to go there with your eyes wide open.»

Since entering the Yakima market in January, Viscom has sold 25,000 of its Best Mexico cards. It’s only a small part of the market. The company is focused on developing a solid reputation to lure a larger part of the market in the long run, Steiner said.

The cards don’t offer as many minutes as some other cards, but the company tries to keep fees to a minimum and connect the calls through well-known carriers, such as Sprint, to ensure quality.

«Once the consumer uses the card and experiences that quality, then word of mouth is the best advertising tool,» she said. «And in that community, word spreads quickly.»

<25A0> Mai Hoang can be reached at 577–7685 or mhoang@yakimaherald.

Looking for a phone card.

* Read the fine print: Advertising signs promise lots of minutes. But check the fine print about fees or other catches.

* Note all the possible fees: Often cards promise «no connection fees.» But there are still plenty of other fees, such as those for using cards on pay phones. Sometimes fees are imposed simply for keeping the card over a certain period of time. The fees can reduce dramatically the amount minutes available on the card.

* Look for a customer service number: At times, the fine print won’t disclose all relevant information. Call and ask about all possible fees. If there isn’t a customer service number, or there isn’t a person at that number, it’s a sign the company is not legitimate.

* Determine your usage: For making short calls abroad, a phone card that charges a high connection fee per call will cost more. For cards used to make a few long phone calls, look for the lowest rate.

Kids going back to school are going to learn book smarts, but will they be „money smart“ as well? The Jump$tart Coalition for Personal Finance and Literacy reports that in its most recent test of high school seniors’ money literacy, the average score was a barely passing 52.4 percent.

You can help your kids earn an „A“ in money matters by developing their financial skills early. Here are five tips to get you started:

Don’t reward good grades with money. Janet Bodnar, author of „Raising Money Smart Kids,“ says that „buying grades“ distracts children from the real reward — the sense of accomplishment they should feel. It’s OK to use it as a motivator in small amounts over limited periods of time, but it should never be the primary reward.

Use an allowance. An allowance is still one of the best ways to teach kinds about managing money. It helps them distinguish their needs and wants and demonstrates the power of saving. Work out a regular schedule and stick with it — and let your child know in advance when she will have an „annual allowance review.“

Incentive pay. Encourage kids to save money by rewarding their efforts. Set up a matching program — for every dollar your child saves, offer to put down anywhere from 5 cents to another dollar for it. Such incentives encourage children to save, which can develop into a lifelong habit.

Don’t keep your kids in the dark about costs. While it may seem polite to not discuss money, you’re doing your children a disservice. Share the restaurant check with them, or talk about how much gas costs each month. If you shield them from costs, you may prevent them from being able to manage their own money when they have to.

Have an idea of what your child spends money on. You don’t need to account for every penny, but you should have a general sense of how they spend their allowance or earnings. It will help you anticipate future problems and keep them from spending (or saving) too much.

Check out new phone options

With the advent of cell phones, Internet phoning and new technologies such as Skype, you can save a lot of money on long-distance (and local) calls. But it can also be confusing to navigate the myriad options and still get the best service for your buck. Consumer Reports offers some suggestions on how to save:

Try Internet phoning. It’s not as complicated as it sounds. To get started, you need something called Voice over Internet Protocol (VoIP), which relays phone calls via a high-speed Internet connection. Service costs about $20 a month or more and offers unlimited local and long distance calls — which could save you about $400 a year if you already have high-speed Internet. You’ll also pay less in taxes. Check with your cable company to see if it offers a package with your cable or DSL, or try a company such as Vonage, which specializes in VoIP. Just remember, you must have an Internet connection and electricity for it to work — so have a basic landline as a backup.

Go totally mobile. You could get rid of the landline altogether and save.

Just get a cell phone plan that offers you enough national anytime minutes. Cell phone connections are still less reliable than landlines, however, so be sure that your phone works in all areas of your home. And if you live in a rural area, be sure that your local emergency operator has an enhanced technology called E911, which allows operators to get locations for cellular callers.

Shop. You can find a cheaper cell phone plan — you just have to look. The plans that are promoted by the cell phone companies may not be right for you, and you could find a better one just by doing a little digging. Call your cell phone carrier or look at its Web site for more options. Read your bill carefully — are you paying for services such as text messaging and picture mail that you don’t even use?

Bundle your local and long-distance calls. Some companies, AT&T and Verizon for instance, allow you to buy unlimited long-distance and local service from the same company. Determine your calling habits — do you make a lot of long-distance calls? If so, it might be worth it.

Phone cards still work. These prepaid cards can save you a lot, especially when you’re staying in a hotel that gouges on its calling rates.

If you don’t make a ton of long-distance calls, the phone card might be a good option. Shop for them at warehouse clubs such as Sam’s to get really good deals.

If you do your research, you could get rates as low as 3.5 cents a minute.

„Class members who took the time and effort to file claim forms will get $2 phone cards while the attorneys will get $5 million.“
Paul Kamenar, Washington Legal Foundation

A conservative legal foundation has objected to a class-action settlement with Sprint Nextel Corp. that calls for the plaintiffs’ attorneys to get $5 million while their clients get noncash benefits.

Questioning the benefit of the settlement to class members, the Washington Legal Foundation has asked a Wyandotte County judge to defer approval of the legal fees until they can be properly evaluated.

Judge Daniel Duncan is scheduled to hold a hearing Tuesday on whether the settlement is fair, adequate and reasonable. The case concerns regulatory fees that were tacked on to wireless customers’ phone bills.

„We’ve objected on the grounds that it’s basically a worthless settlement where class members who took the time and effort to file claim forms will get $2 phone cards while the attorneys will get $5 million for all this hard work they did,“ said attorney Paul Kamenar of the Washington Legal Foundation, a public interest group known for its staunch advocacy of free enterprise.

The foundation’s objection met with a tart rebuttal Friday from one of the plaintiffs’ attorneys, Chip Robertson Jr. of Leawood-based Bartimus Frickleton Robertson & Obetz.

„The Washington Legal Foundation is funded by a bunch of corporations who don’t like class actions,“ he said. „Chief among them is Exxon, which managed to pay its departing CEO $400 million. They don’t believe a person who’s lost $19 should get that back. They want to do everything they can to discourage class actions.“

Robertson, a former Missouri Supreme Court judge, said that what the foundation is proposing is „a rule of law that says that a corporation can steal lots of little bits of money and no one should be able to come and get those little bits of money. So that’s why we have class actions and that’s why they’re plain wrong in this instance.“

The settlement with Sprint would resolve two consolidated cases alleging that the company misled customers by charging various regulatory fees, hiding rate increases in their monthly statements, charging for directory fees, failing to disclose that it rounded minutes up to the next whole minute, and failing to disclose the limitations of its coverage and capacity.

Sprint, while denying all of the allegations, agreed to settle the cases earlier this year to avoid the uncertainties and expense of litigation.

Similar lawsuits were filed against Nextel Corp. (before it merged with Sprint), Alltel Corp. and Cingular Wireless. The Nextel case was also settled.

The Sprint settlement provides different remedies for different classes of customer. Some are to get invoice credits ranging from $5 to $19, others a long-distance calling card with face amounts ranging from $1.50 to $14. The $19 benefit is to be paid in eight installments as credits on customers’ bills.

In its objection, the Washington Legal Foundation called the value of the phone cards „dubious“ for customers who have switched from Sprint to another service.

But the foundation reserved most of its fire for the proposed attorney fees, which it maintained should be limited to more than 25 percent of the value of the benefits claimed.

The court, it said, should defer awarding the fees until it has determined how many class members opt to participate in the settlement.

Robertson, however, said the foundation’s characterization of the settlement as providing few benefits to class members was simply wrong.

„They’re not noncash benefits in the sense that you can get a $19 credit on your bill. So if somebody wants to take advantage of that, that’s real money,“ he said, adding that the total value of the settlement’s benefits was „well over $250 million.“

Even if a very small number of people fill out their claim forms, Robertson said, „Sprint will have to pay a substantial amount of money over time to people as a result of what happened.“

PORT ST. LUCIE — Johnathen Sardone, 21, of Port St. Lucie was arrested Wednesday in connection with last week’s ATM fraud at First Peoples Bank on Port St. Lucie Boulevard in which a man used European calling cards to fraudulently withdraw about $20,000 over three days.

Investigators said last week that the culprit likely used a skimming device to steal information from London credit cards and then used software to transfer the information to the magnetic strips on the phone cards.

According to an arrest report, Sardone, a construction worker, denied involvement.

He is being held at the St. Lucie County Jail on 200 counts of misuse of personal identification, 200 counts of fradulent use of credit cards and one count of grand theft.

His bail was set at more than $2.5 million.

Advertiser Staff

Verizon Hawai’i has donated 1,000 long-distance phone cards worth $10,000 to soldiers of the 100th Battalion, 442nd Infantry.

More than 600 soldiers from the unit are training in Fort Bliss, Texas, and will be sent to Iraq next year.

Nationwide, Verizon has donated more than 200,000 phone cards to soldiers through the United Service Organizations.

More companies join broadband brawl

Comcast Corp. and SBC Communications Inc. have already revved up their broadband engines to attract the coveted high-speed Internet customer. But the next two years could bring nothing short of an broadband arms race, as cable TV and Baby Bell phone companies joust to furnish your home’s every communication and entertainment need.

Phone companies say they’re committed to spending billions to build fiber-optic networks capable of bringing high-definition TV, Internet services and phone systems directly to homes. Meanwhile, cable firms hope to cut into the phone market by rolling out Internet-based calling, possibly next year.

For consumers, the rivalry could yield a cornucopia of new features — and possibly lower prices — as the nation’s seemingly insatiable thirst for a flash-like Web pace persists. But some observers wonder whether broadband proliferation will result in real competition — or merely create cable-only or fiber-only territories.

One thing is certain: The lines traditionally separating cable and telephone companies are blurring.

«Several years from now, the telephone and the cable companies are going to look very much alike,» said Jeff Kagan, an Atlanta-based telecommunications analyst. «It’s going to be one or the other.»

From phone to fiber

You can peek into at least one possible future in Canton Township. About seven homes there are testing what SBC calls «Project Lightspeed.» The company has installed fiber-optic lines directly to the cluster of homes. The telecom firm wants to use the fiber lines to deliver TV signals, phone service and Web connections, as well as advanced features such as video conferencing and home surveillance.

«They’ll have the Web as their first point of contact,» said local SBC spokeswoman Jody Lau.

For now, those Canton homes have connection speeds of 3 megabits per second for both downloading information from the Internet and placing data on the Web, known as uploading. That’s just a fraction of the 15 to 25 megabits per second the company has envisioned for the future. For the tech layman, a megabit connection moves a million bits of information per second, and is roughly 18 times the speed of dial-up.

The San Antonio-based firm says it will invest about $5 billion in its 13-state region to build fiber either directly to homes, or provide the speed of fiber via existing copper phone lines. The company recently sped up the project timeline to reach 18 million households, or about half of its customer base, in two to three years instead of the original plan of five to seven.

SBC currently has about 4.3 million SBC Yahoo! DSL customers who connect to the Internet via digital subscriber lines, a service delivered over traditional copper phone wires. The service, which the company sells only in combination with local phone service, costs about $27 and $37 monthly for speeds up to 1.5 to 3 megabits, respectively. But the company’s future technology will directly challenge cable providers, not only for Internet and future TV service, but also on pricing.

«Our main competitors are cable companies who have raised their prices faster than the rate of inflation,» Lau said.

Fellow Baby Bell Verizon Communications Inc. — the principal phone service in Saline, Tecumseh and much of Lenawee County — is still researching when and where to roll out a similar «fiber-to-the-premises» program. The company claims about 900,000 Michigan customers receiving phone or DSL service.

«When we decide on a community, we’ll go in there and do the entire exchange,» John VanWyck, spokesman for Verizon in Michigan. «Michigan is on the list but we don’t really have a plan yet.»

«The entire fiber-to-the-premises technology pretty much will be the state of the art in a year or two,» he added.

SBC and Verizon quickly announced multibillion-dollar plans to build fiber networks after winning Federal Communications Commission ruling last month. The FCC ruling freed the companies from having to share those future networks with rivals. In the past, Baby Bell companies — including SBC and Verizon — were required to lease space on the phone networks to competitors AT&T Corp. and MCI Corp.

Cable taps voice-over-Internet technology

For their part, cable companies say phone competitors are playing catch-up. Comcast currently provides 3 megabit residential connections, which for most customers cost $43 a month if they have cable TV service, or $58 if they opt out of cable TV. Earlier this fall, the Philadelphia company began offering an additional 1 megabit of speed for $10 more.

Comcast has invested about $1 billion in its Michigan network in the last three years, said Southeast Michigan spokesman Jerome Espy. But he said there are no immediate plans to up the speed over network.

«The network will support anything we want to do in the future as far as speeds and service (are) concerned,» Espy said.

But Comcast is also planning a launch of the still experimental voice-over-Internet protocol, or VOIP service, for customers seeking to make often unlimited phone calls online. The company is testing the service in the Indianapolis area at a trial cost of around $40 a month. But the firm is planning to offer it in the southeast Michigan area sometime next year or early 2006, Espy said.

VOIP will eventually outpace Comcast’s phone service, which is now available in 55 communities in Michigan, Espy said.

«Voice-over-IP is going to be the standard at some point,» he said.

Fellow cable firm Charter Communications, which supplies high-speed Internet service in northern Washtenaw and Livingston counties, also has been testing out VOIP in the St. Louis and Wisconsin markets.

«I think everybody’s going to get down to the same strategy, which is to offer the bundled service,» said Tim Ransberger, Charter spokesman.

Rich Wiggins, senior information technologist at Michigan State University Computer Center, likened the current broadband climate to the long-distance battles of the 1990s, when savvy customers flipped back and forth between carriers. He said the «trench warfare» between cable and would-be fiber providers is only getting started.

«What’s shaking out right now is the cable companies are offering higher speeds of service, and they’re charging more,» he said. «SBC can’t respond to that in the DSL realm. (But) with fiber, the sky’s the limit.»

Regulation and competition

Beneath that sky, the regulatory landscape keeps shifting. Last week, the FCC unanimously voted that Internet-based phone call services fall under the jurisdiction of the federal government, exempting them from some key regulation by states.

The FCC ruling applies to cable, phone and other companies offering an Internet phone. The decision does not, however, stop states from imposing some taxes and fees. It also does not address access charges, which are fees paid to local phone companies for completing calls sent via the Internet to conventional phones.

The development was good news for AT&T, which this summer rolled out its $30-a-month CallVantage service. CallVantage allows Internet calling in 39 states, including Michigan.

But the decision also illustrated the difficult competitive and regulatory environment brought about by new technologies only possible with spread of broadband.

Dave Waymire, head of the Michigan Alliance for Competitive Telecommunications and an ardent SBC critic, said the trend toward «forced bundling» of such services should concern consumers, many of whom currently choose phone, Internet and TV service in an a-la-carte fashion.

«How long is it going to be before SBC says, ’You can’t use a competing voice-over-IP service on our network — you have to use ours?»’ he said.

But SBC’s Lau said like many applications running over DSL, there would be no way for SBC to know if Web customers actually used VOIP. She said the company has done more to foster Internet competition with more reasonable prices and Internet speed options, compared with cable firms.

State regulator concerned

Bob Nelson, a commissioner with the Michigan Public Service Commission, said there is no law to stop Comcast, SBC or any high-speed provider from limiting VOIP competitors on their networks. The MPSC is charged with regulating phone service, including the oversight of emergency 911 calling. Because VOIP customers can conceivably make calls from any part of the country, regulators and others are concerned that 911 calls won’t get to the proper local authorities. The FCC ruling indicated federal regulations should supervise 911 calls made via VOIP.

«We still think there’s a state role here,» Nelson said. «We’re also concerned about VOIP providers that might engage in fraud and there’s no remedy for consumers.»

Some consumer choices are also constrained by geography. For most rural Michigan communities there still is only one broadband provider, and it’s going to stay that way for some time, according to Bob Filka, chief operating officer of the Michigan Broadband Development Authority. The agency, created by former Gov. John Engler, has provided $12 million in loans to 10 companies or nonprofits willing to build Internet infrastructure in rural or under-served regions.

«Technically, you can get broadband in some form almost anywhere,» Filka said. «The question is, can you afford it wherever you are?»

Filka said the fiber to the home may be available in higher-end markets and new subdivisions, but he doubts it will take off as a pervasive technology statewide given its high costs to install. He believes the immediate future means a patchwork of services.

«The promise really is bandwidth to the home,» he said. «It’s going to come in a number of different forms. I think that fiber to the home is not the holy grail.»

If you’d like to support the troops overseas, it’s likely your post office can help you.

The Northland District of the Postal Service is sponsoring a campaign called „Phone Cards for Troops“ that allows customers to purchase a phone card and donate it back to the postal service. The Northland District gathers all phone cards each week and donates them to commanders of area military units, asking them to distribute the phone cards to local troops deployed overseas.

Over 200 post offices in the Northland — which covers most of Minnesota and the western third of Wisconsin — are participating in the promotion. Customers may buy phone cards for $10 (100 minutes), $20 (250 minutes) or $30 (450 minutes).

By Steve Eighinger

Herald-Whig Staff Writer

Those in attendance at Union United Methodist Church’s contemporary service Sunday morning will have an opportunity to hear chaplain Lt. Col. John Read speak — from Baghdad.

Read will address the congregation via an audio hook-up from Iraq. He will be thanking the congregation for its efforts in spearheading a drive which raised 1.3 million minutes of phone cards for U.S. soldiers to use while stationed in Iraq.

The service begins at 11:30 and will last approximately 30 minutes, according to the Rev. Bob Morwell.

«Worshippers will be able to hear the chaplain reflect on his work in that embattled city,» Morwell said. «The general public also is invited, and if time permits the chaplain may be able to field a few questions from the congregation.»

The telephone call was arranged by Morwell, who initially teamed with Read via e-mail to help begin a nationwide drive among Methodist churches to collect phone cards and have them sent to Iraq. The two originally made connections via e-mail.

Methodist chaplains serving in various combat zones distributed the phone cards to soldiers of all faiths.

More than 800,000 of the minutes raised came from the Illinois Great Rivers Conference. The IGRC encompasses 950 Methodist churches in Illinois, including four in Quincy.

All cards collected were 500-minute AT&T models, the only type accepted in Iraq and which cost $25 each. The four Methodist churches in Quincy combined to contribute 82 cards.

«We will be displaying pictures taken in Iraq on our big screen while the chaplain is speaking,» Morwell said. «One of the pictures shows a group of U.S. soldiers holding up a sign which says ’Thanks’ (for the phone cards).»

Morwell said the service is scheduled for the chapel area inside Union United Methodist, but if the turnout is too large for that area the service will be moved to the main sanctuary which seats about 300.

«Everyone is welcome,» Morwell said.

Morwell said a trial run has been made with the connection to Iraq and all results were positive.

Any questions about Sunday’s service or presentation may be directed to the church at (217) 223–6062.

Contact Staff Writer Steve Eighinger at seighinger@whig.com or

(217) 221–3377

Ken Nwogbo
Lagos

Opponents of local recharge card manufacture have mounted campaign to puncture government’s directive that the cards be produced locally. Government nevertheless seems bent on the December 31, 2004 deadline to stop the importation of the cards.

FOUR years ago, Legal giant and foremost Nigerian telecom lawyer, Mr. Paul Usoro (SAN) warned the country to pay attention to local inputs as it prepared to launch its telecom revolution.

Mr. Usoro was alarmed that little or no attention was given to local manufacture of telecommunications equipment and infrastructure.

In a paper that year Mr. Usoro observed that «currently, there is no Nigerian company that is seriously involved in the manufacture of any telecommunications infrastructure or equipment. As Nigeria seeks to meet its telecommunications policy objectives, it is paramount that attention be paid to the manufacture of telecommunications equipment and infrastructure.»

He warned that «failure to do this will result in Nigeria continuing as a net importer of telecommunications infrastructure and equipment».

But as Nigeria joined in the excitement of the successful launch of Global System for Mobile Communications (GSM) services, the need for local input was lost on all its citizens

In the past years, lives have certainly been changed and businesses improved with communications thanks to the telecommunications.

Companies in the industry have also made money but most of it is sent outside. The country as soon as they are taken from the subscribers.

Apart probably from human resources almost every other input is imported and paid for in dollars.

Then, Mr. Usoro’s alarm reverberated this year when President Olusegun Obasanjo, thought that there are few things that could be done locally to save the country and the companies the hard earned foreign exchange.

At a meeting with the key players in the sector, the President hinted that from January next year, that, government would no longer accept the importation of recharge cards into the country

The directive, government said would reduce pressure on the national currency, the Naira, as well as provide employment for more Nigerians.

All GSM operators, MTN Nigeria Communications Limited, Vmobile Nigeria (formerly Econet Wireless Nigeria), Glo Mobile (the Mobile arm of the second national carrier Globacom) and M-Tel (the mobile subsidiary but independent of national carrier, NITEL) as well as most private telecommunications operators manufature their recharge cards from outside the country.

MTN Nigeria recharge card is manufactured by NamlTech in Johannesburg, South Africa, which is the sole pre-paid voucher supplier for MTN.

Cards Technology, a local switching company currently prints M-Tel recharge cards at Nitecrest in Lancashire, United Kingdom.

Nigeria’s second largest mobile operator Vmobile and Glomobile also print their recharge cards in Europe.

Executive Vice-chairman, Nigerian Communications Commission (NCC), Mr. Ernest Ndukwe said this would, however, have to stop with effect from next January.

The directive has continued to receive commendation from a cross section of stakeholders in Nigeria with many of them pointing out that the move would serve as a wake up call for the major operators.

Local companies like, Masterstroke Limited, said local recharge card production is possible and has assured that it has the capability to meet and even exceed international standards.

The company has been flaunting an impeccable service record which includes printing recharge cards for most of the Private Telecommunications Operators (PTOs) and international calling cards used in the country.

GSM network operator, Mtel Nigeria was one of the first to declare that the first batch of its made in Nigeria recharge cards would be ready soon.

Its chief executive officer, Mr. Aad Lois, said the company is committed to adding value and local content.

«I can tell you that our locally made recharge cards would be ready soon and they would read made in Nigeria» Mr. Lois said

Some stakeholders, nonetheless, posit that government’s objective for local production of scratch cards can only be achieved if a number of incentives is put in place to attract adequate investment and expertise in the scratch card sector.

They argue that for many manufacturers, local production will carry a higher cost than exporting into Nigeria, and they’ll only transfer expertise if the government offers these incentives, most notably those pertaining to tax relief or a reduction of excise duties on equipment.

This group called for tax relief through Pioneer Status, tax relief if a large proportion of local raw materials are used in the production process, tax relief if there is massive labour involvement as well as tax relief for investment in disadvantaged areas.

But critics have introduced a curious twist the argument, insisting that the licensing of recharge card production will naturally create a new cost point for the producers (in the form of levies to the regulator) which is likely to be passed on to the customers by telecom companies in the future.

They said that the licensing of producers may lead to the creation of an oligopoly and potential clogs in market supply, adding that operators will be subject to the production capacities and competences of a few licensed players.

«The potential attendant effect is that like the Nigerian oil industry where the breakdown of one refinery causes absolute chaos in supply» they insisted.

«The Central Bank of Nigeria (CBN), does not license the printing of cheque books even though it requires security printing. The cheque books represent an exchange of value for the banks as the recharge cards represent value exchange for the Telco’s. And if in the same local environment one experienced regulator (CBN) has successfully operated for decades without over regulating the system in the execution of its function, then perhaps the government needs to encourage the regulator in the telecoms industry to borrow a leaf from the CBN’s books.» They argued further.

Opponents of local manufacture of recharge card also said that Nigeria would be the first country in Africa to implement such a ban.

Issues of security were also raised. Security they claimed is the most important consideration in the scratch card manufacturing process because the focus is on the protection of the pin code used by the customer to recharge their account. Security is integrated in the environment of the production process, as well as in the card itself

According to them, the accepted practice with regard to the sourcing of scratch cards has been; that scratch card suppliers are part of the operator’s supplier chain, just as the regulator do not determine network suppliers, it is not the part of its optimal role to determine which suppliers individual operators should use. In a competitive market environment, operators will always opt for suppliers that offer them the highest quality at the lowest possible price. If it is in the operators’ own interest to source scratch card production locally (and it generally is), they will actively seek to do so as part of continuous efforts to reduce costs.

The other is that the licensing of scratch card manufacturers is beyond the purview of the telecoms sector’s watchdog, but is an intricate part of each country’s industrial policy; in this context, the creation of a card manufacturing operation is subject to the same labor, business, and environment regulations as that of any other production facility, and any authorizations have to be afforded by the relevant government authorities.

The opponents, also argue that regulatory intervention in the operator’s value chain would hamper Nigeria’s ability to benefit from the latest technologies, including the latest tools to facilitate payment for mobile services and combat fraud: scratch cards are only a part of a complex and sophisticated billing value-chain; any restrictions in Nigeria on the development of one element of the value chain will limit the rapid deployment in the country of the latest billing technologies, such as roaming vouchers.

NCC intervention is described as inconsistent with a key objective of universal access and the licensing of card manufacturers by the NCC would be an unnecessary regulatory intrusion into the operator’s supply decision-making process, in an extremely competitive sector where operators need as much flexibility as possible. Scratch card vouchers are not only a billing tool; they are a tool of differentiation and brand loyalty.

They noted that regulatory intrusion into the operator’s decision-making would send a negative signal to the investment community, especially now that operators need all the necessary goodwill to raise adequate funding: the message would be that of unexpected regulatory intervention in areas that global best practice generally regard as part of the operator’s purview.

The resistant by operators may not be unconnected with the fact that some of them have offshore companies which they use as pseudo vehicles to frit out their earnings in dollars.

Many also question operators’ reluctance to submit themselves to regulation, adding that if they are allowed to do, so the result would be chaos and confusion.

Despite the campaign, government appeared unbent and had gone ahead through the NCC to penciled 27 companies to go to the final stage of the process leading to authorization to manufacture telecommunications recharge cards locally.

The Companies are, Controcards Ltd, Nitecrest , Masterstroke Packages Ltd, Security Printing and Allied Solutions (SPAS), Hemnugg Ltd, Value Trust Inv Ltd, NIC Systems & Graphic In-Line Ltd, Austine Brooks Nig Ltd , Prudence Business Solns Ltd and Smart City Plc

Others are, Kalila Nig Ltd, Southbeach Company Ltd, Cards Technology Ltd, Intergra Telecomms Ltd, SNECOU Group of Companies Ltd, Royal Alliance Ltd, Airtel Ltd, Alfa Juliet Mangler Ltd, Exxis Facility Management Ltd and HeyGate Press Ltd.

The rest are, Advantel Limited, Nelag & Company, NamlTech Ltd, Gijima Technologies Ltd, Premiumideas Ltd, Orga Cards System and Xcard Ltd.

President Obasanjo has assured that there would be no giong back and it appears that is how it will stay despite stiff resistance from some operators.

Noel Wandera
Nairobi

Kenyans will next month start paying more to ocal calls over fixed telephone lines.

Telkom Kenya yesterday announced that it plans to increase by price of local calls by up to 6 percent.

The highest increment will affect those with private lines, whose tariffs have been adjusted by 16 per cent from Sh7.40 to Sh8.60 for three minutes.

Public Payphone (booths) users will pay an extra 14 per cent when the new price of Sh8 per three minute comes into effect. Previous they paid Sh7.

The company also increased the price of local calls using prepaid and calling cards, which are billed per second.

Consequently, prepaid customers will now pay 11 cents more, reflecting the Sh0.50 price up from Sh0.39.

Telkom also announced that its calling card customers would pay an adjusted price of Sh0.33 per second, up from Sh0.29 per second.

While making the announcement at the Teleposta Towers, Telkom Kenya Managing Director, John Waweru said it was the last time the company was increasing its local area call charges.

«Our rates are now cost based this is the end of story (increasing charges) unless something drastic happens to the shilling,» said Waweru.

Waweru was accompanied by among others: Engineer John K. Mosonik in charge of Operations and Joseph Ogutu, General Manager and personal Assistant to the MD.

Tariff changes involving calls to mobile phones remain the same. Ogutu said the local calls provide 60 per cent of the company’s phone revenues.

Telkom also reduced the price of trunk calls within the East African region as well as out of the region.

National trunk calls were reduced by 31 per cent from Sh17.40 to Sh12 per minute, peak hour tariffs within the region went down to Sh40 from Sh45, reflecting a reduction of11 per cent.

Similarly, peak rate international calls to any destination in the world were reduced to Sh72 (US$0.90 cents).

«The new tariffs have been harmonized alongside those of other leading telecommunication companies on the continent with a view to remaining competitive,» said Waweru.

He said that the price changes are part of the firm’s competitive strategy, which will soon have a competitor following an end to its monopoly in June 30, 2004.

He also announced that Telkom will transfer from an analogue to digital exchange at a cost of Sh80 million (US$1 million). He said money for modernizing the exchange lines is available.

Waweru said that various tenders had been advertised that will involve works to enhance the capacity of various exchanges and installing 49,000 lines in Kisumu, Eldoret and Nyeri.

By December 2004, Telkom Kenya is expected to offer a Voice Over Internet Protocol (VoiP) facility.

The facility provides a much cheaper method of voice communication through the Internet.