The history of prepaid phonecards is indeed an international affair. We’ll take you on this trip around the world, and bring you up-to-date on an industry that’s growing at an absolutely incredible pace. Then, with all that information under your belt, you’ll be able to enter the phonecard market with a clear understanding of exactly what you need.
We’ll start in Italy - 1975
A vending-machine manufacturer and supplier called SIDA, recognized a need. Payphone vandalism was a big problem for the Italians. Thieves were breaking the payphones to steal the coins – there was a shortage of coins at that time. SIDA, in 1976, introduced the first magnetic strip phonecards so people wouldn’t need coins. However, they could only be used in special phones, and because they were too thin, they kept jamming.
Other countries throughout Europe felt that the advantages outweighed the disadvantages and quickly adopted the magnetic strip phonecards. The first countries to follow Italy were Austria, Sweden, France and the United Kingdom.
Then we jump across the ocean to Brazil – 1978
Nelson G. Bardini developed inductive technology – a system that used a series of coils embedded in the phonecard. One of the coils would burn out after the time on the card was used up. Although this technology was created in 1978, it wasn’t actually presented to the world until the national inventors’ exhibition in 1982.
Now we go all the way around the world to Japan – 1982
During that same year, Japan’s Nippon Telephone and Telegraph introduced their first prepaid phonecard. Again, it was a solution to a problem in the cities – commuters had to use a large coin to operate payphones on the subways. The Japanese card caught on quickly and tens of thousands were sold to daily subway riders in Osaka and Tokyo.
Back across the continent to France – 1984
France, having introduced their phonecards soon after Italy, worked on improving the technology. They sought to increase the use of the magnetic strip by inserting a computer chip. This was the beginning of “smart cards”.
And across the ocean again to the United States – 1987
World Telecom Group, a partnership of Siemens and General Electric Company, was the first significant company to launch phonecards in the U.S. They developed their own magstripe technology, and this technology is now among the most widely used of its kind.
Back across the ocean to England – 1988
Phonecards took an interesting sideline – the tremendous volume and variety of phonecards attracted card collectors. Now they could add another item to their sportscard-collecting hobbies. And to help track these, Dr. Steve Hiscocks created “The Collectors’ Book of Telephone Cards”, the first world catalogue of telephone cards and, indeed, the first printed telephone card catalogue of any sort. It covered 61 countries - all those that were issuing cards at that time (except for Singapore and Japan). It had 108 pages – that’s a lot of phonecards!
And now we return to the U.S. – 1989
By this time, all the U.S. phone companies wanted a part of this thriving industry. The first in was AT&T, introducing their own prepaid phonecard. At the same time, the first remote telecards appeared in Hawaii.
The next big player on the field was NYNEX (New York’s Regional Bell Operating Company).
In 1990, they offered the first non-magnetic-based calling card in the U.S. This new phonecard technology was actually a step away from technology – it was a much-simplified system. NYNEX’s prepaid calling cards used PINs (Personal Identification Numbers) to identify the cardholder. Now the cardholder just had to dial an 800 number and enter his PIN to make a long distance telephone call. The great thing about this was that now the caller could make phone calls from any phone anywhere in the U.S.
By 1992, all the major phone companies were offering prepaid wireless phone cards. Revenues throughout the industry reached $12 million with projections of double that over the next several years. However, their projections weren’t even close. Phonecard sales jumped way beyond expectations every year after that, and still are today. Check out these numbers:
- 1993 – over $25 million, more than double the previous year.
- 1994 – over $250 million, more than 10 times the previous year.
- 1995 - $650 million.
- 1996 - $1 billion.
- 1997 – over $2 billion.
- 2000 – over $3 billion. Projections now are $10 billion per year by 2010.
Moving back to technological developments, in 1995, US West introduced the first chip-based prepaid cards, while Sprint offered their “FONCARD”. Then, more recently, the first disposable combination cellphone/calling cards came out in 2001. Talk about a booming industry!
International phonecards shrink the world
So there’s no doubt that the phonecard industry has taken the world by storm. Remember how many cards there are in the collectors’ catalogue? The Italians probably had no idea what they’d started when they tried to solve their local problem. But start something they did! So maybe you should start something and find out more about the phonecard industry – and make that call.
About The Author
Gareth Marples is a successful freelance copywriter providing tips and advice for consumers. His numerous articles offer moneysaving tips and valuable insight on typically confusing topics.
