NEWS / COMMENTARIES

State of the Hobby: A review of the past

I found myself today looking over the past 187 issues of the newsletter, and decided it would be fun to take a look at the state of the hobby, predictions and overview articles that I have written over the years. This is a very different hobby than when I started writing in the late summer of 1995. Back then, people involved in phonecards were optimistic about the future – Very optimistic. We thought we were a small hobby that was going to be huge. It really was an exciting time – Lots of companies producing new issues of cards on a regular basis, several price guides, magazines, etc. It's 2000 now, and that did not happen. In fact, quite the opposite has happened. We have no magazines or price guides (at least in the U.S.) - Fewer companies issuing cards, especially topical cards that would be of interest to collectors. There are fewer dealers, many have reduced their presence, or left the hobby altogether.

So what is the state of the hobby for this year? I don’t see much change from where it is now. There was some optimism in 1999 with the Orlando FUN show, but the 2000 show was not the same atmosphere. I can’t imagine a print magazine starting in the current market. I see a further shakeout of dealers, and possibly long term collectors. I don’t see a change with producers of cards. The retail end of the market is very strong for generic cards at very inexpensive rates. I don’t see many "collector-oriented" issues being produced though. Retail prices for older cards are way down from even the past couple of years. Finally, there aren’t enough new collectors entering the hobby, which is a problem that has always been there, but it is exasperated by the current market conditions.

Is everything negative? No! There are a few bright spots. The hobby is an international one, and plenty of people across the planet are actively collecting. While there is a down-turn in the U.S., this is not universal. The internet is the lifeline of this hobby. 1999 was the year of Ebay. It certainly has introduced phonecards to people who would have never thought of collecting them. Perhaps that will increase the number of collectors. My personal experience, as well as some others I have talked to is that sales are still good, but the average amount of the sale is lower. The percentage of international customers has increased a lot this past year. Certain topics like Coke and Disney are widely collected.

What I would like to do is reprint from past issues of POL articles discussing the trends of the hobby. I had a good time reviewing them, I hope you will too!

From Issue 54: November 2, 1996

The Summer of ’96

What happened to the summer of 1996? As the year began, 1996 seemed like such a promising year for collectors. We went from explaining what phonecards were to why we collect them (a good change, it is a lot easier to explain why we collect when people know what we collect) A lot of big events were supposed to and did happen this year. They included:

1.The Olympics

2.The Elections

3.The Post Office Selling Phone Cards

4.Baby Bells going out of Test Mode

5.SVC’s

Well, all of these things perhaps with the exception of Baby Bell’s were disappointing. The Olympics were going to be tougher than I thought. Since Visa was the official "card" of the Olympics, this meant that it would be tricky to produce phonecards. AT&T had the Prepaid Phone Calls. I have seen a few other cards, but I have not even seen or heard of many foreign cards. I’m sure many were produced, they just have not been actively available here. This is surprising, since rec.collecting.phonecards is an international newsgroup with an international audience. As reported last week, the AT&T

jumbos have been dumped on the market, so those who did pay to collect them now find themselves with a card that is literally worth a buck!

In my mind, the elections have to be the biggest disappointment. I thought it would be a perfect medium to advertise a candidate or issue. Imagine, every time making a phone call, hearing the candidate’s voice and reminding you to vote for them on election day. I expected this to be available at the National Level, but also expected some local participation. Granted

phone time is not cheap, but it could have even been a paper card with five minutes of phone time. I’ve not seen a single one of these cards anywhere! Maybe in 1998, but not this year.

The Post Office selling phonecards was greeted by an enthusiastic response from collectors. Many months after, I’ve not seen one card on the market (outside of the post office) for sale, used or new. While many thought this would get people to use and collect phonecards, I think it failed in its efforts. One problem was that the per minute cost was too expensive for

the low denomination cards. The only sort-of reasonable rate was on the $100 card, but not many casual users are going to plunk down $100 for a phonecard. I haven’t, and won’t. The general public (non-collectors) are actually quite smart in determining what is a good value and what is not. I learned this by frequenting Spencer Gifts, where the 25 cents per

minute GTI cards sold very well, and the higher priced Sprint Cards did not sell at all.

Baby Bells have made an impact. Same with the Big Three (AT&T, MCI and Sprint) all are doing good jobs of marketing cards to the mass audiences. The confusion that is the telecommunications act may actually benefit prepaid card users. News that Baby Bells will not be allowing AT&T and other charge cards may end up with people using the prepaid variety to

escape that mess.

SVC’s are an interesting topic. They swiftly descended upon us over the summer, things seem to be quieter now. I think they do have a bright future, but for now, they are simply not viable. Two words will describe why: Expiration Date. Cash does not expire. SVC’s do. When that discrepancy disappears, they will be more viable. People are used to paying electronically

and with cards, so switching to SVC’s will happen.

From Issue 78: May 4, 1997

State of the Hobby

With NYNEX pulling the plug on prepaids, HT Technologies declaring Chapter 11 with many of their cards not working, and Omnitel gone completely from the scene, it may appear that we’ve had a rough few months. While this may seem bleak, I don’t necessarily see the past few months as a negative period, but instead a period of growth with a few problems along the way.

This hobby is expanding. While I have heard contrary view from some, I’m in a position (via this newsletter, which now has an e-mail circulation of over 1900) to see the growth. While I may interact with the on-line members of this hobby more than those not on-line, I still think it is representative of overall growth. Every day, I get e-mail from new collectors excited

about this hobby.

We’re gaining people who have been exposed to phonecards and are starting to collect. There are more casual than serious collectors. What I mean by this is people who pick up a card here or there, but may not collect like a coin collector completing a series, or a sportscard collector completing a set. A lot of these new collectors started with promotional offers from various products and or have purchased cards to use - Something I and others have been saying for what seems many years now - The only way that this hobby is going to expand is when people used phonecards. The unbelievable number of "limited edition" sets geared toward collectors in 1994 and 1995 seem to be on the decline. This is good news as well.

Promoting this hobby should not be left to just dealers and writers. Every collector can promote the hobby - Share it with others. One collector, Art Becker, drops used British phonecards wherever he goes. (even on other dealers tables at shows) Give a phonecard to a child. I have done this with quite a few, and they now have awareness of phonecards. I even learned

about the vote for the president cards in boxes of cereal last fall from a nephew who I introduced the hobby to. We all can expand and promote the hobby.

From Issue 107: December 7, 1997

1997: The year in review

It seems almost unbelievable that we are at the end of 1997. This marks my 4th year in this hobby, which is by US standards a very long time. 1997 was a difficult year for this hobby - It was the year that a lot of companies seemed to give up, or were forced to leave the phonecard business.

1997 seems like the year that the presses stopped. It appears that three hobby publications have stopped printing - PCM Report, The Collector’s Advantage, and Telecard Times. This really reduces the access by non-computer collectors. There is now only one printed price guide for U.S. cards, Moneycard Collector.

What will happen in 1998? I see a status quo concerning publishing. Moneycard Collector announced recently that they will be changing their format to make it less expensive for advertisers, so perhaps there will be some sort of expansion through their publication. 1997 also saw the release of Moneycard’s 800+ page catalog, which really is a boost to the hobby. There is already talk of a second edition. I don’t see any new publications on the horizon, and I doubt any of the publications that have stopped publishing will come back. Perhaps some of the industry publications can take up the slack, and start promoting the hobby (and thereby increasing their readership)

Concerning the internet, I feel that is the driving force behind this hobby in the U.S. - 1997 saw a large expansion of internet phonecard sites and businesses. Back when I started in 1993, there was practically no web, there were a few dial up BBS’s for phonecards, and of course there was CompuServe. 1997 saw the Phonecard area on CompuServe move from a

section within a forum, to its own forum! CompuServe will start allowing access to their forum via the web in 1998, opening it up (at least with limited access) to almost anyone with internet access. Rec.collecting.phonecards, a newsgroup on the internet, continues to see more posts to it on a daily basis. Chat rooms are becoming more widespread on the internet as well, With the IRC Phonecard Channel, hosted by Ivan White, seeing a lot of activity. A club on AOL also was started this year,

which appears to be active and thriving.

Outside of the internet, phonecard collectors seem to be in isolation. It appears the only successful club in the United States is on the East Coast. Several collectors have written about forming clubs, but I have had few reports if any of any successful meetings. Unlike most other hobbies, we are still without shows, or any sort of National Show. This definitely has

something to do with the size of the hobby, which is still a lot smaller than most thought it would be by 1998. There doesn’t seem to be any unified effort to get a show going. Even if a site were picked, there would still be the major problem of getting the public to attend. The closest we have come to a National Show was the B&B show held in Anaheim in 1996. While

the dealer turnout was tremendous, there were very few collectors in attendance. I don’t see this situation changing in 1998, in order for there to be a successful show, we need more collectors! Perhaps the way to go is to attach ourselves to another hobby show, such as the Long Beach Collector’s show, which has a built in collecting audience.

1997 was also a tough year it appears for phonecard companies, especially for the Network Marketing companies. As of this writing, Destiny and STS appear to be dead. Amerivox is stagnant as well. With the major issuers, NYNEX halted their program (with much controversy) earlier this year, and Frontier is out of the business as well. Scoreboard will probably not

be making any more phonecard packs, which means that the trading card industry has completely divorced itself from phonecards.

1997 also saw fewer phonecard promotions. This is a trend that does not make sense to me. There were a ton of holiday promotions in 1995, when the average person had not heard of a phonecard. In 1997, thanks to companies like 7-11, there is a tremendous growth in awareness of prepaid cards. However, few companies are using phonecards as a way of enticing

customers into their stores.

So overall, what should 1998 be like? I expect there to be growth as far as collectors go, but I would not be too surprised if there were further cutback in print magazines, as well as major phone companies and Network Marketing companies. The big events of 1998 are the Winter Olympics, and the elections here in the U.S. With the Olympics about two months away, I

don’t see that being a large event as far as phonecard collecting goes. I thought that 1996 would be a breakthrough year, because of the Olympics in the US, as well as the elections. Neither events increased awareness of phonecards as much as I thought they would. Maybe 1998 will surprise me. For now, this will continue to be an internet driven hobby, with many

collectors and dealers doing a lot of their transaction through the medium.

From Issue 123: April 26, 1998

State of the Hobby

Reports from various phonecard dealers have been coming in, and unlike the news for much of the late 1996 and 1997, things appear to be going very well. Collectors are collecting, dealers are dealing, and issuers are not going mad by making too many cards. Whats important is that the increase in activity appears to be collector driven, not investor/speculator driven. This is very important, because speculators are in the market for the very short term. This has caused the crash of many collectibles markets, including coins and sportscards, and to a smaller extent even the phonecard hobby.

There is an increasing knowledge about prepaid cards among the general public. Additionally, the internet is growing at an incredible rate. While the newsstands are not filled with phonecard magazines, there is a lot of information available to people on-line. The new U.S. telecommunications rules that charge companies who offer an 800 number over a payphone has

had a smaller impact that I thought it might. While it is annoying that many companies are passing the charge on to phonecard users, I don't think the impact will destroy the prepaid market.

Network marketing companies such as STS and Destiny are history, with Amerivox a small shadow of its former self. While many praised these companies for bringing people into the prepaid marketplace, they probably did more damage than good. There are a lot (and I mean a LOT) of people left with STS cards that they paid too much for, and are not working. People

who were buying and selling those cards at inflated prices at the special conventions were speculators, not collectors.

A group that I would consider to be an asset to the hobby are refunders. Phonecard collectors may not know what a refunder is, but rest assured that refunders definitely know about phonecards. Refunders are a group of people who go after rebates and free offers as a hobby, and as a way to save money. They tend to enter a lot of contests, too. With the proliferation of prepaid card offers, refunders have obtained a lot of cards, and many have become collectors. They are also a very nice group of people as a whole!

There is still a lot of discussion about a large phonecard show or series of shows, but still no consensus. A lot of dealers have been talking about attaching a phonecard section to an established numismatic show, such as the FUN or Long Beach shows. There is currently a phonecard presence at each of these shows, but there are generally a few phonecard dealers

scattered among a lot of numismatic dealers. Ideally, a phonecard show would be great to go with the industry shows put on by Telecard World. It doesnt seem like that will ever happen, but to me it seems to make sense. It would be great promotion for the hobby as a whole, the phonecard industry as well as the collectibles segment.

Thankfully, Scoreboard appears to be history. Their stock closed at 9 cents a share on Friday, and they will probably not produce another phonecard product. There seems to be fewer products issued, and that is good. Too many products are too hard to keep up with! Hopefully, the trends over the past few months will continue into 1998.

From Issue 155: December 27, 1998

1998 Year in Review

I'd like to start off by wishing everyone a happy new year. 1998 sure has been an interesting year for phonecard collecting. We started the year with STS (a network marketing company), Scoreboard, and Moneycard Collector Magazine. As we start 1999, all three of those are a part of history. In my opinion, both STS and Scoreboard damaged the hobby, and I am not

sad to see that both are gone. STS at one point was reported to have tens of thousands reps, who resold phonecards for profit. Unfortunately, this company folded, leaving a lot of these reps with plastic that had no phonetime on it. I'm sure a lot of people also never received commission owed. This is not good for the phonecard hobby, as I am sure there are many

people out there who will now have nothing to do with a phonecard.

Scoreboard had been the center of controversy for many years. They are credited with ruining thematic collecting of Coke and McDonalds cards. Additionally, other problems with the company were unrealistically high $1 per minute rates, overproduced cards (despite announced production runs) and cards that always were worth less after their release. Not a

single one of their issues were worth as much 6 months after release.

The biggest story of the year has to be Moneycard Collector Magazine folding. They started 1998 as a glossy monthly magazine, and soon switched to a tabloid format. Then came the announcement that they would cease to be a standalone, and that they would be incorporated into Coin World Magazine, with a web site as well. Just a few weeks ago came the news

that they would cease altogether. Their absence will be felt by many.

There is no doubt that 1998 was a difficult year for this hobby. However, there are a few bright spots which will make a difference to the future of this hobby. The first is the expansion on the internet of resources for phonecard collectors. The medium makes it feasible for collectors and businesses to continue with a low overhead cost compared to print marketing

and advertising. The second bright spot is that the retail end of this hobby continues to grow at a phenomenal rate, and will continue to do so for years to come. This means that more people are issuing cards, and more people are using the cards. With more cards out there, more people will use the cards, and hopefully put them away. This is really what needed to happen a few years ago, when most people on the street in the US had no idea what a phonecard was. There will be fewer collector oriented issues in the near future, with more cards being produced with the intention that they be used by the consumer. This will help weed out companies that suddenly go bankrupt, leaving the consumer with no phone time. The third bright spot is a recent announcement by the US Justice Department that they will be looking into a credit card monopoly by Visa and Master Card. They have stated that these companies control that market, and are holding back developments in the smart card market.

I believe that now is a very good time to be a phonecard collector. It is a worldwide hobby, and although it seems that hard times are upon us here in the US, all signs point to this hobby expanding from its current base. With many issues having a production run of under 5000, and with prices down from a few years ago, I believe that there will be a day we will all be

wondering why we did not purchase cards then. A comparable analogy is the baseball card market. In the 1970s, there were a few adult collectors, no really organized hobby in print, and prices that by todays standards look very low. You could purchase a Mickey Mantle rookie card for a few dollars. There arent any more cards out there today, just a more organized

hobby and a lot more collectors. That Mantle rookie will set you back many thousands of dollars.

From Issue 180: October 3, 1999

4th Anniversary of POL

Its hard to believe that this all started 4 years ago now. As I have said a few times in the past, this newsletter was the start of my on-line

business, although it was not intended to be a business. Ive been active with phonecards for over 5 years now, and most of that time I have been

publishing POL. I started off as a graduate student in New York, now Im in California with a child (Aaron, 2) and another on the way!

This past year has been an especially difficult one for phonecards. Moneycard collector folded up shop about a year ago, and the US market has been on the decline. A number of dealers have simply gone out of business or disappeared, and I am unsure if there are any more full time phonecard dealers left in the US. Along with Moneycard collector went a price guide, which while it was never very accurate, it was there. The latest price guide there is to look to is the 1997 catalog, soon to be three years old. Its unlikely that any of the phonecards are worth more than the published price, just about all cards are lower than they were in 1997.

What has hurt the US hobby? There are a few big factors. The first is non-regulation of cards. This has been a problem since the beginning, with

companies like Telemax going out of business early, leaving many collectors with cards that could not be used. Over the past couple of years, companies

like Destiny, STS and Amerivox have joined their ranks, leaving many more people with cards that do not work. Almost anyone could create their own

phonecard. I produced several different ones over the past few years.

Another problem is the expiration date. Produce a nice card, charge $20 for it, and collectors did buy the cards. The time expired, and the catalog

said the card was worth at least $20, possibly more. This was great, it seemed that every card was worth more than the issue price, so why bother

using the time. If the time did not expire, then there would always be value associated with that card. True, there isnt anybody who could have

predicted how low phone time would become. A company is not competitive if their price is above 10 cents a minute, but I remember when 50 cents per

minute was a good deal. When a collector tried to sell that card, there werent many takers. It was an expired card, just a pretty piece of plastic.

The price guide says $22, but it probably wouldnt sell for $2.

Finally, issuers who had expired cards would place them on the market after the time expired for a fraction of their face value. There has been a

debate over the years whether this is right or not. I dont think that this is a problem you can pin on dealers, as I am sure many out there might

believe that. If something makes it to the marketplace, the dealer should purchase and sell it. It doesnt make sense not to, since there will always be

someone out there that will. Dumping cards in my opinion is a blame that should be put on the issuer. Many issuers did not pay for phone time up front, they paid only for whatever time was used. Once the cards expired, it isnt like the time that was lost was prepaid for, it most likely wasnt. This was a way to get extra profit out of the cards.

The problem is, prices spiraled downward. This isn't a terrible thing in itself, many collectibles markets work like this. The problem is that in the near future, it seems unlikely for there to be a rebound. An example of price jumping is a box of 1989 Donruss baseball cards. When issued, this costs

about $12 retail. It probably jumped to about $15 on the secondary market through 1991, and then the sportscard industry crashed. As recently as a

couple of years ago, it was possible to purchase this for as low as $2 per box. Today, that box is worth over $20. Stamps, coins, they have all gone

through similar cycles of up and down. Is there hope for phonecards to rebound? I believe so, and certainly hope so. I believe that one day we will look back and see this as a period of change. The old market certainly is dead, and prices will not go anywhere for a while. Here are some reasons to be optimistic about the future of phonecards

1) Use of phonecards. When this hobby first started in the US, almost nobody knew what a phonecard was. Today, that is just the opposite, very few people do not know what a phonecard is. They are everywhere. While they may not be as nice looking as the ones produced for the marketplace, they are phonecards and they are being used. Are they being collected? I am unsure. The retail use of phonecards has skyrocketed. I compare this to the stamp hobby at the beginning of this century. Everyone used stamps, but most people never thought of them as collectibles. Then, in the 1920s and

1930s, that changed, and a hobby was born. Same for sportscards, it was a kids hobby until the late 1970s. The problem with phonecards was that it

became a hobby before people were really interested in collecting them. Stamps and coins are utilitarian items, that people happened to collect from

use. I believe the same thing will happen with phonecards.

2) All markets have their ups and downs. This is certainly a down time for phonecards, but there are plenty of good buy opportunities out there. Ive

never suggested that anyone purchase phonecards for investment (which is fortunate, it would have been a poor investment choice) but for the

collector, there are a lot of bargains out there. Some of the retail prices right now are a fraction of what they once were. The people who purchased

those boxes of cards for $2 that are now worth $20 are probably very happy. I think such issues as the Baby Bells (NYNEX, Bell Atlantic, Ameritech) are probably worth acquiring at low prices. With the current prices, there isnt much risk of the prices going down, probably for the future now much chance of the prices going up, but in the long term who knows. If the hobby makes a comeback, many of us will wish we purchased more. In 1980, a Mickey Mantle rookie card startled a small and scattered collecting community for breaking the $1000 price range. Today, that card sells for many times that price.

3) Quantities - There are a lot of issues out there that are numbered in the hundreds, or thousands. Right now, that is more than the market can

absorb. Maybe in the future, that will still be more than the market can absorb, but perhaps not. This is especially true with items of a topical

nature. Take for instance, Disney phonecards. I can not imagine there not being a demand for Disney items. Many phonecards have been absorbed into

Disney collections that will never again be available to the phonecard market. Over time, more and more items of that nature will simply not be

available.

4) There are still collectors. While this newsletter has not expanded as much as it did in the early days, the number of subscribers has not

decreased either. A few hundred have been added over the past year. Considering the number of unsubscribes due to cancelled e-mail accounts, Easily a thousand new people are here that werent here last year. The current total is over 3,400. Additionally, this is a worldwide hobby, with many collectors around the globe. As long as people are still collecting, there is still a hobby. The outlook may not be so good with dealers and revenue, it

certainly is less than it was when this newsletter first started. Back then, we were simply overwhelmed with new collector issues. Today, there are

very few. Also, promotions were everywhere, today they are scattered here and there. Collectors are still collecting, they just arent purchasing at a

level that they once were.

To the question of what can be done about the hobby to improve it, I am without answers. I suppose that we just have to let it take its course, and

hope that it rebounds. I dont think there is anything that dealers or collectors can do to artificially make it improve. The answer is easy, we need

more collectors, we need a print magazine and price guide, we need a fluid market. A fluid market is where a collector can purchase an item, and

realize there is a way to sell the item if they need to. Thats something that has existed for other collectibles, but not really for phonecards.

While the answer may be easy, the path to getting there is not. As far as the future of this newsletter, I am still here, I am still collecting and

selling. This summer has seen a significant reduction in the number of issues being produced. In the first 3 d years, I rarely missed a week, usually

only when on vacation, moving across the country or have a child being born. I am unsure if I will make it a weekly again. There simply is not enough

news to warrant that. There are few press releases, fewer issues available through promotion, and not as much news due to decreased retail activity.

I am also involved with other collectibles newsletter for coins and currency, and one for stamps. I will probably produce this newsletter every one to

four weeks. Ill produce more when there is news, and less when there is no news. Commentary has been down due to a decrease in the amount of spare

time I have, and due to lack of issues to comment on.

Before I close this anniversary issue, I would like to hear from collectors and dealers about their feeling on the hobby. I would like to publish this in a

future issue, so you can e-mail me and let me know if you wish your comments to be attributed. You can be published anonymously on this one.

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Until Next Time,

Alan

Distribution

Phonecards On-Line© is published by Alan Cohen. It is a weekly newsletter devoted to phonecards - Current news, viewpoints, and reviews of new issues.

This newsletter is distributed free of charge, and available two ways.

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