phonecard competition

PHONE CARDS

VoIP is not the only way to escape the clutches of your telco and slash your phone bill - in particular for pricey overseas calls.

Phone cards, once the almost exclusive domain of backpackers and overseas students, are now widely used by average customers keen to take advantage of cheap rates.

The cards can be bought at most newsagents - look for the advertising posters plastered outside many stores - and often carry lurid artwork and go by quirky names such as Pay Peanuts, Go Bananas and Joy. But the rates on offer are anything but a laughing matter for people keen to slash their phone bill.

For instance, by choosing the right card, you can call Britain from Australia for as little as 0.03c a minute with no flagfall. On top of that you must bear the cost of a local call.

The process for most cards is to dial a standard number to access the system, followed by a PIN. The card system will then tell you how much credit you have remaining, after which you can call the number you want as you would normally do.

As well as being sold by newsagents, the cards are increasingly available online in the form of "virtual" cards, where you receive a PIN after purchasing credits.

So how is it done? Kenneth Ting, founder of http://www.phonecardselector.com.au, a reseller of the cards, says the secret is not VoIP technology. Instead, Ting says, phone card companies, including Australia's biggest provider, Telecorp, purchase "airtime" on the established telco networks at wholesale prices for a fraction of the cost the telcos charge their own customers.

"If you are running a telco, the biggest cost you have is collection and billing. When they sell in bulk it's paid upfront and there are no billing issues. The telcos don't mind selling these minutes wholesale because it's opening up a new market for them."

This system of deep discounting has rung the bell of many consumers, with Telecorp alone selling more than 85 million minutes each month.

"I still get emails from people thanking me for the service, saying they can now call their sister in the [US] daily when it used to be once a month or less," Ting says.