Guest Blog
by Gene Retske

The Earth moved in January. As the former editor of The Prepaid Press, I frequently lamented the lack of a trade association for the prepaid phone industry, especially the sector that focuses on prepaid international calls.

Now, it has finally come to fruition.

From the good efforts of Gustavo de la Garza, president of Marcatel (owner of Vivaro), and Pete Pattullo, CEO of NetworkIP, a dozen companies met in Washington, D.C. the week of January 23, 2012, and agreed to form the American PrePaid Phonecall Association, or APPPA. I was asked to serve as Executive Director, and accepted the challenge.

In the past week, I have been very busy with the adminis-trivia involved in incorporation, and all the necessary details that go with setting up a new trade association – corporate papers, finance, telephone numbers (we have one- 202.370.7600), website, etc.

As one of our first actions, we met, in an informal session, with several representatives of the Competition and Enforcement Bureaus of the FCC. They were interested in the Association, but want to see how it unfolds.

Prepaid international phonecalls are a lifeline for the millions of immigrants and foreign workers in this country, in addition to citizens who have friends and relatives overseas. The primary mission of APPPA is to assure the availability of this vital service. Without it, millions of people would be stranded without a viable economic means lifeline to friends and relatives overseas.

Please contact me if you want further information about joining APPPA.

Last month we reported on the FTC actions regarding prepaid calling cards. In this issue of TPP, we are reporting on another action, one that dovetails with the FTC action, but may be even more ominous. In this case, 4 prepaid calling card providers have been hit with NALs. Not sure what an NAL is? Better read on!

Last week, I sat in on a meeting with folks from the Federal Trade Commission, Division of Marketing Practices (part of the Bureau of Consumer Protection). I will report later as appropriate on the content of the meeting, but I thought it would be important to give some overall impressions.

All of this is occurring in light of the Millennium Telecom case. If you are not familiar with the case, you should be.

The Federal Reserve Board last week kicked the Durbin debit-card issue down the road. Some have hailed this as the conclusion of the issue. In case you are not aware, the Fed increased its previous limitation of 12 cents to 20 cents, plus an adjustment, still a significant decrease in the existing fees, but not as draconian. The new fees are set to go into effect in October; the first decision had the fees going into effect July 1.

For those of us who came from a telecom background, Durbin is starting to strike a familiar tone, and not a good one. In similar scenarios, agencies of the federal government allowed political pressure to bring a process to its knees.

If you recall my last blog, I suggested that a delay in implementation of the Durbin amendment would be worse than if implementation went forward. Well, be careful of what you wish for. Yesterday, June 8, the U.S. Senate was unable to overcome a threatened filibuster, so the vote to delay the Durbin amendment did not go forward.

What does this mean?

It means, simply, that the debit card industry can now move forward and adjust to life with diminished revenues from debit card transactions. Will it be the end of debit cards as we know them? Maybe, but more likely, new markets, new structures and maybe even new products will be developed in light of the new regulations. Remember that there is an authority that will actually set the rates, so there will be opportunities to influence their decisions.

So, to paraphrase a popular expression, the debit card is dead. Long live the debit card!

In an article today, the New York Post reported that Sen. Jon Testor has introduced a rider the Economic Redevelopment bill that would delay the implementation of the Durbin Amendment for up to two years.

Probably the most ballyhooed payment story of 2010 was ISIS, the joint venture of AT&T, T-Mobile, Verizon and Discover. Because of the size and market footprint of the partners in the venture, many analysts trumpeted this as the most significant event in mobile, payments and the World Cup. OK, nobody mentioned the World Cup, but the announcement was earth shaking.

Now, ISIS has announced it will be scaling back significantly. WSJ had extensive coverage today.

(If you don’t subscribe to WSJ, here is a Reuters article about the WSJ story.

What happened?

The Consumers Union has again blasted prepaid debit cards, issuing a study that shows that checking accounts cost less money than debit cards.

Duh!

Of course prepaid debit cards can cost more than checks, especially if you don’t consider some of the facts.

Trade shows are truly the pulse of an industry. Between the conference sessions, keynote addresses, exhibits and coffee shop talk, you can get a real cross section of what the participants are thinking. CTIA last week was no exception. It had high drama, like when Sprint CEO Dan Hesse admitted to AT&T VP Ralph de la Vega, the deep concerns he had about the AT&T/T-Mobile deal. (T-Mobile’s USA CEO, Phillip Humm, was notably missing.)