Ripped from the headlines  - Prepaid is on the ropes, the end is near! Regulation, litigation, a sagging economy, competition and increased costs are going to sink the entire industry, and soon!

Sound like a TPP story? Nah, this could have been a prepaid calling card cover story over 15 years ago, and maybe was, but nobody saved all those old magazines. These factors, and other even more ominous prognostications by experts, analysts and industry ne’er do wells, have echoed through the halls of the industry since its very beginnings.

In fact, somewhere in the dustbin of history are the projections I remember seeing on an annual basis, showing all the reasons why prepaid calling cards could not possibly survive another year. These highly regarded analysts, or maybe, formerly highly regarded analysts, had significant research and analysis to back up the theory that prepaid calling cards were a passing phenomenon.

But, they were wrong, as is so often the case with those who observe and report, and don’t practice the art. Like, um, well, you know, journalists, like us. We may have the capability to see things in a different perspective, but we do not feel the heartbeat as do the practitioners. 

So, why, for example, was a “Big 5” industry analyst, speaking at a telecom industry conference in early 1994, so far off the mark, when he boldly, but inaccurately, predicted the collapse of the entire prepaid telecom market “before Santa Claus rode his reindeer.” (I was there, and heard this prediction first hand.)

For the answer, let’s go back in history to 1776. By October, George Washington, and his rag-tag Continental army, were pushed from Manhattan, by British General George Howe and his crack British regular army. With the Americans on the run, they took more than 2800 prisoners at Fort Washington, and drove the rebels across the Hudson River, into the wilds of New Jersey. Washington and the remnants of his army then fled across the Delaware River into Pennsylvania, where the brutal weather, a lack of food and military discipline undoubtedly led some analyst or another to predict that Washington would surrender “before Santa Claus rode his reindeer.” We don’t have a record of that, but it could have happened.

Of course, as all students of American history know, as Santa was warming up the team of reindeer, Washington and his men were crossing back over the Delaware, and, just as Santa and his team were making their appointed rounds, Washington hit the Hessians at Trenton, giving them a sound, but not decisive, thrashing.

What was Washington’s secret? Well, just like the prepaid calling card people in 1994, he didn’t listen to the analysts. He had a different vision, and executed it with conviction. In 1994, in open defiance of the analysts, the prepaid calling card crowd had a different vision, and actually grew by double digits. Some even say triple digits. And, so it went for the better part of the next 10 years, as the godfather of prepaid, prepaid calling cards, continued to confound the experts. (Actually, to be accurate, there was one analyst, one Dr. Judy Reed Smith of Atlantic ACM, who was very close with her projections of continued growth. She was a lone voice in the wilderness, however.)

Assuming it was not just a crazed desire to prove the analysts wrong, what was the secret?

For the answer, let’s go back to 1776. No, enough with the history lesson already. But, the common factor could be boiled down to one word – Innovation. Washington, and the prepaid calling card people two centuries later, changed the game. They bent the rules. They refused to accept the overwhelming odds against them and pulled out a victory.  Had they accepted the common wisdom of their times, either of them, they would have fulfilled the predictions.

The key was innovation. The hallmark of prepaid, starting with calling cards in the 90s, and following through to today, is the ability to see beyond the horizon and be willing to do things in a different way to survive. In the case of prepaid, it is technological and entrepreneurial innovation, adapting to conditions to overcome the negatives. In 1776, Washington did the improbable when his ill-equipped, poorly trained army, attacked a superior force in weather so inclement that nobody would dare launch such an attack. In 1994, prepaid calling people expanded markets, added products and made investments in infrastructure.

The lesson of history is simple, innovate or evaporate.