With increasing margin pressure and the consolidations now underway in the prepaid card business, many prepaid service providers are looking to add new revenue streams and protect their margins with new service features. This might mean either replacing existing prepaid platforms or a “cap and grow” strategy in order to continue to best leverage their existing infrastructure, and affordably launch new services. Almost certainly, it means leveraging the economics and flexibility of IP to tap the low service minute costs, economical Capex and Netex of SIP trunking to launch new services and expand customer service capacity. If you’re an existing prepaid service provider looking to adopt such a ‘cap & grow’ strategy, it may be time to update your expectations and requirements for both back office and subscriber service features. In TDM business models, selection criteria typically centered around the ability to manage rate costs and sustain acceptable call quality, thus “Least Cost Routing” was a key selection criteria. Physical TDM connectivity using T1s/DS3s etc. often required that individual physical connections be connected to a specific carrier. So TDM prepaid platforms had to integrate least cost routing functionality to select the route for a call. With IP networks, the game’s changed. Feature flexibility is essential for margin growth, especially in today’s market. On the other hand, IP routes are comparatively similar and stable in terms of costs and quality. Moreover, traditional traffic routing processes such as route selection can be easily and economically handled by a gateway/softswitch or a session border controller interfaced to a SIP-based prepaid platform, eliminating the need for the prepaid platform to perform this function. With this in mind, here are a few IP-based provider and subscriber features that can help drive & stabilize your service profitability: Business Management Features: 1 Web Storefront: Distributors should seriously consider the advantages of driving more initial and recurring sales through the Internet, and expand their sites beyond the customer care now increasingly common for top-offs, account balance checks and other subscriber interactions. Your Web site can economically become a compelling initial point of sale and service entry point that draws subscribers by highlighting service quality, dependability, markets served (routes) and rate promotions. Collecting email addresses and encouraging Internet-based re-provisioning lets you directly market to your constituencies, allowing you to make both initial and recurring sales without sacrificing margin to retail channels. Likewise, cards sold via retail outlets should heavily promote Internet-driven sales and re-provisioning, helping retain margins otherwise lost down-channel. 2 Point of Sale Interface: point of sale interfaces at key outlets allow distributors to activate PINs as they’re sold, giving you new levels of account ownership and expanding your ability to compete. 3 Payment Processing and Validation: implementing a payment processing infrastructure allows prepaid service providers to become a virtual storefront without sacrificing margins to payment processing companies. We’ll discuss the platform requirements for this in next month’s feature. Subscriber Features: 1 One Stage Dialing: One of the fundamental values of IP services (aside from its economics) is its service flexibility, so aggressively leverage its potential to support innovations that attract and retain consumers. For example, direct one stage dialing is an increasingly popular service. Whether for credit-challenged customers or for subscribers otherwise invoking usage control, one stage calling gives prepaid subscribers the at-home convenience and “service personality” of direct, single-stage dialing. This functionality allows subscribers to call from their home phone number, with the prepaid service provider authenticating the call from the ANI so that their system is in the path. This prepaid service works with the subscriber’s home phone, without any card involved. Authentication is done without IVR behind the scenes, and is transparent to the subscriber and their users. It allows the subscriber to establish a land line account and leverage a standard POTS handset and network or SIP phone and VoIP service for international routes. This is a compelling economic proposition and a clearly preferred alternative for the myriad of scenarios where either the A or B leg of the call has limited or no computer access. 2 Multi-Party Prepaid Calling Services: Similarly, this incremental service enables prepaid subscribers to initiate ad-hoc conference calls. It offers particularly interesting usage models and potential service variants for prepaid service providers seeking international market expansion. For example, a service such as dial-in prepaid conferencing is attractive in many global markets where today multi-party call participants have to hang by the phone and wait for the moderator to call in and include them because their moderator’s region or network happens to lack conference bridge capacity. 3 Alternative Initiation: The newest twist to prepaid calling and conferencing is a feature that enables participants to initiate conferences from their cell phones via e-mail, Web interface or texting to centralized sites, without incurring prohibitive charges because the call or conference call path is actually routed to a land line phone. For both of these last two subscriber service features, an adaptable and extensive set of multi-language support features is essential to support global market expansion. These proposed IP-driven prepaid service provider and subscriber features may be a bit less obvious than traditional TDM features, such as Least Cost Routing, but they can help you to profitably grow your existing services and subscriber base, open up new markets, and potentially expand your geographic services reach. Next month, we’ll continue looking at features to navigate your business successfully through a challenging market, and discuss service platform characteristics that can protect profitability and potentially support your expansion into wholesaling. In the meantime, please keep emailing your questions and comments to me at keno@pactolus.com.

Ken Osowski is the VP of Marketing & Product Management at Pactolus Communications Software. He can be reached at Keno@pactolus.com.