Software developer US/Intelicom stands poised to capitalize on prepaid wireless, an industry segment some analysts expect to grow rapidly during the next few years. The company entered the prepaid arena with the idea that the same stores that rent furniture and electronic equipment to college students, small businesses and the credit-challenged could also rent out wireless phones.
In April 1996, US/Intelicom’s parent company introduced its first prepaid cellular platform based on a Motorola Inc. cellular phone. The product sold “too well,” said Ed Szczesniak, vice president of sales and marketing for the company, which later that year formed a separate company to handle the emerging prepaid product offerings.
While the United States is a lucrative prepaid market, said Szczesniak, the company also is looking into international opportunities, especially in markets where it is not economically feasible to lay fiber cable for local telephone service. In some struggling economies, he said, citizens often will dig up the copper and sell it in order to buy food.
Rather than putting the prepaid functions at the switch, US/Intelicom’s software resides on the wireless handset. Although sometimes a more expensive option, prepaid on the handset allows customers to roam, receive inbound calls and make long-distance phone calls, said Szczesniak.
The software is carrier independent, although the company has built in systems to create loyalty to the carrier and distributor. “It’s like buying a car, and we’ve made it so you can use anybody’s gasoline,” said Szczesniak.
Once a customer begins service with a certain carrier, however, the customer can only buy airtime from that carrier and only at the original dealer location or any of its authorized distributors.
US/Intelicom offers customers two methods for adding airtime to their prepaid phones. Customers can purchase a prepaid calling card and enter the code number on it into the phone and press “send.”
The US/Intelicom system runs a variety of verification tests on the phone and then adds airtime units.
In a second method, introduced in November, customers can select a desired number of units using the phone’s interface and press “send.” The system debits a pre-determined bank account, credit card or in-house account and then automatically updates the airtime to the phone.
In addition to the price of the software, US/Intelicom receives a transaction fee every time a customer activates a phone or adds airtime.
US/Intelicom’s software is electronically field switchable between prepaid and post-paid options, meaning customers who must opt for a prepaid service due to credit history can later switch to a post-paid option when their credit has been repaired.
The dual functionality of the software also means that dealers can lower inventory carrying costs by offering both options in the same handset, said the company.
Besides opening up a once-untapped market, prepaid service also allows customers to control spending. Parents can give a phone to their child while still controlling which phone numbers can be called and how much airtime is available and employers can provide phones to their employees but limit their airtime charges.
US/Intelicom’s system gives carriers control as well, by allowing over-the-air programming to customize phone functions, area codes and billing rates by market, the company said. Carriers also can create targeted marketing campaigns aimed at customers who are using too much or too little airtime or are likely to churn due to incorrect use of the phone or service.
US/Intelicom isn’t out for brand recognition, said Szczesniak. The phones containing the company’s software can contain any combination of brand names, even if US/Intelicom’s name is excluded.
“I don’t care if the rest of the world doesn’t know who US/Intelicom is as long as they are using our product,” said Szczesniak, who noted the company continually works with manufacturers and carriers to determine what kinds of functions customers want on their phones. He said he would like manufacturers to think of the company as their research-and-development organization.
“We have a lot of things in the works,” he said. “That’s our mission in life-to be a development organization, pure and simple.”
US/Intelicom identifies its three competitors in the market as Topp Telecom, JRC and Telemac.
“The competition justifies the market,” he said. “There could be five more of us out there doing this same thing, and we’re all still going to get rich.”
