Research Overview
As domestic prepaid wireline long distance demand is declining and international demand is predicted to follow, providers are looking at areas where they can still achieve revenue growth and sustained profitability.
The prepaid long distance industry has remained fairly stable in recent years. The decline in the domestic market has been offset by continual demand from the international sector. However, with the continual decline in pricing and emergence of effective substitutes, the demand for prepaid wireline long distance as a whole is predicted to decline.
This Frost & Sullivan research examines the challenges that prepaid calling card providers face in developing strategies for revenue growth and sustaining profitability in the maturing prepaid long distance market. It also discusses the driving and restraining factors for revenue generation and gives recommendations on how to proceed in this market.
Pricing and convenience make prepaid long distance services more attractive
"Prepaid services remain competitive in terms of pricing in the overall long distance market. This is especially true in the international space. Competition is edging in from VoIP, wireless and 1+ long distance service providers, yet prepaid continues to be the lowest price point in some markets." Prepaid calling card per-minute-pricing remains exceptionally low for the consumer. The movement towards clean cards has allowed for the consumer to realize the low cost-per-minute pricing structure. Also, many consumers find the conveniences of prepaid attractive. Consumers can now purchase prepaid long distance in a wide variety of retail locations and online. The cards are also available in an assortment of denominations and minutes of use. In the international arena, the large migrant population uses prepaid long distance in great quantities. For many, it is their only means to contact family and friends in their home country. Affordable pricing and availability in convenience
stores and bodegas allows immigrants to easily purchase and replenish prepaid calling cards.
Providers are diversifying their product lines and partnerships in order to improve competitive positioning
"Today, prepaid long distance providers compete almost wholly on price. In order to differentiate from both prepaid and industry wide competitors, prepaid providers must diversify and partner." The ability to provide multiple prepaid services in one card or at the very least from one point of service (POS) kiosk is a growth opportunity for prepaid providers. Partnering with retailers and other service providers will also enable growth and increased market share.
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