Vonage, one of the pioneers in the voice over IP calling market has launched a new product that bridges the old telecommunications world and the new — a digital calling card. Vonage says about 20 percent of international calls are still made using calling cards, but such products are also a source of hidden fees and scams.
Vonage (s vg) says in its release the card will have no connection fees, account maintenance fees, or minimum monthly charges. And you buy it online.
Vonage has seen success with its international calling business so far. During the company’s second quarter earnings call Marc Lefar, Vonage’s CEO noted that half of its customers subscribe to Vonage’s international plan and 35 percent of all of its customers are active international callers. So it makes sense for the VoIP provider to expand its international offering beyond subscribers to its landline VoIP service.
The card isn’t actually a card — it’s a web site where users can pre-purchase minutes on a “digital calling card” and get a number to call when they want to use the service. Much like it did in the landline business, Vonage is offering lower prices and using IP connectivity to cut into the high-profit international voice business.
For Vonage, the calling card strategy is similar to its strategy of using a Facebook app (s fb) to get onto mobile phones. It shows that it is being far more careful about expanding its users than it was back in the mid-2000s when it flooded the airwaves with expensive TV commercials. Now it is leveraging other platforms as a way to expand its user base — perhaps recognizing that the market for cheap VoIP landlines is not only limited, but shrinking.