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Archive for Sunday, February 28, 1993

STARTUP COMPANY GIVES CALLING CARD DISPOSABLE SPIN

February 28, 1993

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A local entrepreneur's latest venture takes the telephone credit card concept and turns it on its head.

The Time Machine, a new company started by Lawrence businessman Dave Fonseca, is actively marketing It's Time to Talk!, a disposable prepaid long-distance calling card that's packaged like a lottery ticket.

Fonseca says four chains comprising 4,500 convenience stores have signed on to sell the cards. Initially, the chains are introducing the product in pilot programs involving just a portion of their locations. He estimates that, by the end of April, Its Time to Talk! will be available in 450 stores.

In Lawrence the cards are available at Quik Grocer, 2447 W. Sixth.

Although the format of It's Time to Talk! may be new, Fonseca says the idea of a prepaid telephone debit card isn't original.

"The concept itself has been around nearly 40 years," he said last week in his Lawrence office. "It's been used extensively in Europe. In Japan, you go to a machine, pop in your yen and out come cards."

IN FACT, Fonseca said, the Japanese even collect cards, which in that country come in series that might depict baseball players or flowers.

"Now if you go to Japan, Germany or the U.K., you'll actually see more phones that take the cards than (take) coins," he said.

Fonseca, whose background is in bar-coding and telecommunications, is no stranger to the startup companies. Among his previous ventures was Lawrence-based Telephone Solutions Inc., which sold long-distance telephone services to such entities as hotels and airports. Through a contractual arrangement with an affiliated firm, Fonseca in 1989 was forced to sell that company.

Fonseca and the three private backers are banking that the disposable debit card concept's acceptance can be duplicated in the United States.

LONG-DISTANCE time on the standard version of the It's Time to Talk! card sells for a flat 33 cents a minute and gives the caller 30 minutes of time to anywhere in the continental United States. A Quik Call card, which retails for $4.50, buys 10 minutes of long distance, and an international version, which sells for $24.95, provides long-distance access to anywhere in the world. The rate at which time is deducted from that card depends on where the consumer calls.

Consumers use the card by calling a toll-free number printed on the card's face and punching in an indentification code hidden beneath a scratch-off latex patch on the card. Through the ID code, a computer keeps track of how much time is used on a call and the remaining balance for subsequent calls. A tone alerts the consumer when remaining time is about to run out.

In theory the concept is simple, but Fonseca concedes he faces a marketing obstacle in selling it to Americans. Their experience is limited to plastic telephone credit cards issued by big-name long-distance carriers who send a bill at the end of the month.

TO COMPLICATE matters, the company will be targeting a market made up of people who rely on pay phones for long-distance calling.

Although that group may include seasoned business travelers, those people generally have a long-distance credit card. The primary market The Time Machine is pursuing has no other long-distance options and tends to fall into a lower economic stratum.

Fonseca is undaunted. He cites the concept's success in the Caribbean and other Third World markets. He also points to industry estimates that worldwide sales of prepaid calling cards totaled $1 billion in 1991. Last year, he added, more than $15 billion in coins were plugged into U.S. pay phones last year.

"It's not something that can't be learned," he said. "It's a familiarity level."

Fonseca also says the target market will be more receptive to the company's message of cost-savings. Users of It's Time to Talk! will save an average of 65 percent over the cost of coin-purchased pay phone calls.

He hopes the early emphasis on sales at convenience stores, which often are pay telephone hubs, will help tap the market he's seeking.

FONSECA, who sends cards to his 19-year-old son in California in the interest of family communication, also sees potential in the college-student market. The company is planning a marketing blitz in Panama City, Fla., during spring break.

Airport gift shops, post exchanges on military bases, bus stations and college bookstores also are among the locations in which The Time Machine would like offer It's Time to Talk!

Within the next few months, the company plans to unveil a line of greeting cards called "A Gift of Time," which will contain It's Time to Talk! cards. Sentiments will run along the line of "miss you call home," said Nancy Crisp, marketing director for The Time Machine.

And within 60 days, Fonseca says the company will launch the Executive Card, a plastic, gold card version of It's Time to Talk! Fonseca expects it to be attractive to firms that want to control employee long-distance costs through prepurchasing fixed amounts of time at below-market rates. It won't be designed to be disposable and consumers will have the option of adding more time to it.

FONSECA NOTED that the Executive Card will compete with debit cards offered but not extensively marketed by AT&T and Sprint. However, Fonseca said the 33-cent per-minute rate on the standard It's Time to Talk! card is nearly half of theirs and that he expects the savings on the Executive Card to be even greater.

The strategy on the It's Time to Talk! concept is pretty straightforward, he said.

"Initially we've gone after it at a very low profit margin," Fonseca said. He declined to discuss revenue projections.

"We're not going to make much on one card, but we're hoping to sell millions of cards."

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