Business is easy to enter

Published Tuesday, October 7, 2008

WASHINGTON (AP) - One reason that the prepaid calling card market is ripe for fraud and deception is that it is so easy to get into the business.

Calling card providers don’t need to run their own telecommunications networks. Instead, they just need to buy wholesale long-distance minutes from telecom carriers.

For domestic calls, the card companies lease lines from big U.S. carriers such as AT&T Inc. and Verizon Communications Inc. And for international calls, they buy minutes from the many "termination carriers" that focus on different parts of the world.

The other pieces of the puzzle that calling card providers need are back-end computer platforms and databases that connect customers with the places they are calling, generate PIN numbers, assign calling rates, assess fees and charges and handle billing.

Card companies can purchase part or all these systems from third-party vendors - some of which provide both the back-end technology and the calling minutes all in one plug-and-play package. From there, it is up to the card providers to set the calling rates and fees.