The Prepaid Press - December 15, 2007 - (Page 10)

GENERAL PREPAID December 15 · 2007 - 10 5 MINUTES WITH Arnie Goodstein, CEO, WCGS interviewed by Gene Retske When you want to predict the future, the best teacher is history. In the prepaid calling card business, there are few individuals that have been in it longer than Arnie Goodstein. Arnie started a calling card business in 1991, grew it to a decent size, and in 1996, sold it to RSLCom and ran their prepaid calling subsidiary in the US. In 2000, he started World Communications Group Services, WCGS, where he is today. GR: Did they get all 1,000 minutes? AG: Yes, they did at that time, and we had a nice, healthy gross margin on the minutes. GR: So, how does the business differ today? AG: We are in the business today, not of selling calling cards, but providing switching platforms for other people who sell calling cards. I saw a need in the marketplace for people who didn’t have the capability to provide their own cards to distributors. That’s why we started this business in 2001. We just run switches for other people. We don’ produce a single retail product ourselves. GR: With the long history you have in prepaid calling cards, how would you characterize the industry today? AG: Obviously, the number of large players in the marketplace, i.e. IDT and STI, have shrunk dramatically. There are very few places for distributors to go anymore, which is why we are in business. I see a lot of consolidation. I see companies, distributors, who have no innate desire to be a card provider, but become providers because they have no choice. That is a major shift in the business that has really been happening pretty GR: In what way have things changed? AG: We have seen things like that pop up before. There was a little noise made, and they went away. But this time, it looks like it’s sticking a little more, which is a good thing. GR: Good how? AG: This industry, cleaned up and being a level playing ﬁeld is, number one, the right thing to do. This is the only business in the world where GR: So, Arnie, you have been in the game a long time. When did you start with prepaid calling cards? AG: Late 1991, maybe very early 1992. GR: And, calling card unit rates were fairly high back then? AG: Yes, my ﬁrst card was $1,000. GR: A thousand dollars? AG: Yes, that’s correct. GR: Did you sell a lot of them at that rate? AG: I guess it was large in terms of volume. You didn’t have to sell that many cards compared to cards today to make some money. And, everything was proﬁtable. It was based on minutes that were closer to a dollar than a couple of cents. So, it was a very different business. It was so early that nobody was printing plastic cards. Nobody had thought about it. We were actually making calling cards by taking our business cards and putting Brother P-Touch labels on the back of them with the 800 numbers and PINs. The cards were issued live; there was no scratch off. GR: How were they sold, at your location? AG: No, we were a calling card provider, one of the ﬁrst. We knew people in the phone shop business, and we were supporting those businesses. We were selling cards to those people who wanted to make calls without having to come to the phone shop to make the call. They could dial an 800 number to get access, and punch in a PIN, just like a regular calling card today. “I see companies, distributors, who have no innate desire to be a card provider, but become providers because they have no choice.” people have been able to get away with dishonest practices and things, that in almost any other business, would have raised a lot of eyebrows and caused a lot of lawsuits. The fact that it is cleaning up and starting to become more normal is an excellent thing. The legitimate people in the business who want to do business the right way will do better having a more level playing ﬁeld. GR: So, you see the industry getting better? AG: Getting better in [its business practices], but I don’t see the industry growing any more. I think the serious players that are left in this business have a lot of opportunity if they do business the right way. GR: So, the business will be ﬂat. AG: I think it will continue ﬂat. There is a constant stream of immigrants into this country. What drives the calling card business is not the stuff that goes out in K-Marts and Wal-Marts, but the cards sold in the bodegas to migrant workers. All kinds of people come into this country who have no ability to make phone calls, other than to buy calling cards. That drives the bulk of the actual dollars in this industry. There is a constant inﬂux of those people and I think it will remain fairly stable. What has been happening, is that as the people are here for awhile, they start ﬁnding other ways to make phone calls. Obviously, prepaid cell has caught on. Prepaid ANI in people’s homes. So as people become more and more attuned to other ways of [making calls], some of them tend to shift away from the prepaid calling cards, which is why there has been so much growth in some of these other areas. Arnie Goodstein is CEO of WCGS. Visit WCGS online at www.wcgsltd.com. Marc Marc March March 3-5, 2008 • The Rio All-Suite Hotel & Casino • Las Vegas 8 Th Ri All Suit Hotel Casi o Las The Rio All-Suite l-Suit e Cas Casino a “This is the only business in the world where people have been able to get away with dishonest practices and things, that in almost any other business, would have raised a lot of eyebrows and caused a lot of lawsuits.” dramatically over the last year or year and a half. I see it in our customers. They are not doing it because they want to, they are doing it because they have to. Because they have tens of millions of dollars per month in revenue. It is shrinking and the people they are buying from are squeezing them down and not allowing them to make money. The only way they can stay in business and grow is they have to become their own card providers. GR: How would you rate the industry today, in terms of potential? AG: It all depends on who you are. Some of the card providers have been getting beat up pretty well. You are obviously well aware of the issues about the [IDT] lawsuit and the [Attorney General] investigations, and the marketplace is starting to change because of that, really for the ﬁrst time in the 15 years I have been in this business. ‘08 THE INNOVATORS Learn from the Top Minds in Prepaid Jane Thompson WAL-MART 2,400+ Prepaid Professionals 900+ companies represented Harit Talwar DISCOVER FINANCIAL SVCS 57 sessions Laura Kelly MASTERCARD NEW OPPORTUNITIES Drive profits via new markets and technologies Jeffrey Ma Protagonist of BRINGING DOWN THE HOUSE CASE STUDIES Top consumer and B2B companies help you develop profitable prepaid and stored value programs Richard Carmona 17th SURGEON GENERAL OF THE UNITED STATES Share Large Innova Please mention code XU2148PPP to receive a 10% discount! tive So lutions st Pre at the paid & Wo r l d Stored ’s Value Event www.prepaidcardexpo.com The Prepaid Press Wishes You a Happy and Healthy Holiday Season and a Prosperous New Year http://www.prepaidcardexpo.com http://www.wcgltd.com http://www.prepaidcardexpo.com

Table of Contents Feed for the Digital Edition of The Prepaid Press - December 15, 2007

The Prepaid Press - December 15, 2007 GENERAL PREPAID 2007: Prepaid in Review New Prepaid Association? Contents A Funny Thing Happened on the Way to the Forum Regulatory Rundown: FCC Enforcement, SEC Cracks Down, VoIP Hacking, & Wireless Regulation The Legal Line WIRELESS Prepaid Wireless Roundup kajeet to Offer Horoscopes, Jokes and Trivia Redknee Extends Converged Billing Solution AT&T GoPhone Offers Roaming Option in Mexico Total Call Mobile Introduces Holiday Bonus Wireless in Brief INTERNATIONAL Spot Rates Keycorp to Distribute Hypercom in Canada International in Brief Mobile Communications in Latin America Gets a Leg Up TELECOM & TECHNOLOGY T&T in Brief Phone House Launches New Card Facebook Goes Mobile CVT and Total Call Settle IDT Lawsuit Wireline Capex Grows 7% in Third Quarter PAYMENTS Transcard Selected for Discover Payroll Cards Vesdia and MXT Card Services Form Alliance The Giving Tree Card Gives Back MasterCard Launches Prepaid Travel Card Payments in Brief 7-Eleven Pushes Video Games Capital One and NetSpend Merger Off i2c Launches New Release of Campaign Manager Prepaid Card Dispensing from ATMs Credit Card Design Competition Begins NRF Says Gift Cards Gaining Popularity EXTRAS Classifieds Contact Us Our Advertisers

The Prepaid Press - December 15, 2007

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