THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Tuesday, November 15, 1994 TAG: 9411150316
SECTION: FRONT PAGE: A1 EDITION: FINAL
SOURCE: BY DAVE MAYFIELD, STAFF WRITER
LENGTH: Long : 101 lines
Americans' wallets are already bulging with credit and debit cards. But 7-Eleven, the nation's largest convenience-store chain, thinks there's room for one more.
Beginning Thursday, 7-Eleven's 210 Hampton Roads stores will start selling one of the hottest new products in retailing: prepaid long-distance phone cards. For $19.99, customers will be able to buy a card authorizing up to 60 minutes of long-distance calling.
Such cards are already widely used in Europe and Japan. But they've been available only for the past few years in the United States. The Revco Drug Store chain is among other retailers selling them. McDonald's has issued them as a special promotion with its Extra Value Meals.
7-Eleven's plan for handling them is the most ambitious among U.S. retailers so far, however. It is rolling them out in more than 5,300 U.S. stores this week.
The biggest advantage to the cards is cost.
Although they are never cheaper to use for long distance than directly dialing from home or work, pre-paid cards are often less expensive for consumers than regular calling cards issued directly by phone companies like AT&T, for which billing is handled after the fact. And the new cards are much less expensive than calling collect, using pay phones, or going through an operator.
That makes cards like 7-Eleven's appealing to independent sales representatives, vacationers, military personnel and other travelers. More and more parents are also giving them to their children to use from college or camp.
7-Eleven says it is able to undercut regular calling-card rates because it negotiated bulk purchases of phone-line capacity from several long-distance companies, including MCI.
Here is how 7-Eleven's card, which is typical, works:
You buy the card first. You get 15 minutes for $5.99; 30 minutes for $10.99; or 60 minutes for $19.99. That works out to between 33 and 40 cents per minute.
To make a long-distance call, you dial a special toll-free 800 number and then enter a multi-digit authorization code on the back of the card. You are then prompted to enter the actual phone number. You can dial anywhere in the continental United States.
Computers keep track of the time clicking off your card. A voice prompt notifies you when you have one minute left.
One disadvantage: If you run out of time in mid-conversation, you can't automatically switch to another prepaid card without restarting the process.
7-Eleven has high hopes for the prepaid cards. It says telecommunications analysts predict a $3 billion U.S. retail market for the cards in 1996 - up from $75 million in 1993.
``The sheer fact that the market is going to explode like it is drew us into it,'' says Cami Spurgin, a project specialist for the store chain, a division of the Dallas-based Southland Corp.
7-Eleven is far from the first to enter the market. Prepaid cards have been widely used in Europe and Japan for 15 years. An estimated $1 billion worth were sold last year in Japan alone.
Even in the United States, the market is starting to get crowded. AT&T and other big long-distance companies sell their own versions.
Long-distance carrier LDDS Communications Inc. has been selling the cards on more than 130 Atlantic Fleet Navy ships since September, for instance.
``It's probably the fastest-growing segment of our business,'' said Mark Welton, vice president-marketing for LDDS, based in Jackson, Miss.
Globally, there's even a market for the cards as collectibles - since they often are issued in limited-edition sets. LDDS has issued a variety of custom cards emblazoned with special photographs or artwork, including one that commemorated the 50th anniversary of D-Day and the Battle of Normandy.
Germans are among the most voracious collectors. About 30,000 attended one such card show there recently. Some rare cards sell for thousands of dollars each. ILLUSTRATION: [color photo of Phone Card]
A Cost comparison
Rates are for individual consumers. Businesses are often able to
negotiate lower rates for calling cards:
Norfolk to Atlanta, 3 minutes:
7-Eleven pre-paid card, the equivalent of $1.20 on the 15-minute
card, $1.10 on the 30-minute card, $1 on the 60-minute card, no
matter what the time.
AT&T, dialing direct, 81 cents weekdays, 48 cents evenings, 42
cents nights.
AT&T calling card, $1.64 weekdays, $1.37 evenings, $1.28 nights.
Norfolk to Williamsburg, 3 minutes:
7-Eleven pre-paid card, the equivalent of $1.20 on the 15-minute
card, $1.10 on the 30-minute card, $1 on the 60-minute card, no
matter what the time.
Bell Atlantic, dialing direct, 73 cents weekdays, 44 cents
evenings, 29 cents nights.
Bell Atlantic calling card, $1.33 weekdays, $1.04 evenings, 89
cents nights. Plus, an extra 25 cents per call if dialing from a pay
phone.
KEYWORDS: TELEPHONE PHONE CARD by CNB