How Phone Cards Came To Be...
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The Evolution of Phone Cards
Overview
The Bretton Woods system governed international monetary exchange rates among Western nations until its collapse in 1972, leading to a return to currency convertibility. This shift contributed to inflation, particularly in Italy, creating a coin shortage that fueled rampant payphone vandalism and theft. To address this issue, the first prepaid phone card was designed, enabling payphones to operate without coins.
Origins and Spread
Initially developed by SIDA, a vending machine manufacturer, these early phone cards featured a magnetic strip. Although they faced issues, such as jamming, the concept quickly spread across Europe by 1977. In Japan, Nippon designed a more efficient prepaid phone card, which gained widespread adoption.
Expansion to the US and Beyond
A significant leap occurred in 1987 when World Telecom in the USA partnered with Siemens and General Electric to create a reliable phone card. AT&T entered the market in 1989, launching its first prepaid cards in Hawaii. In Australia, Telecom Australia (now Telstra) conducted a trial in Victoria, issuing around 300,000 cards in denominations of $1.50, $3, and $6. That same year, Telecom New Zealand tested phone cards in Christchurch.
Technological Advancements
In 1990, NYNEX in the USA innovated with PIN-based prepaid phone cards, using a toll-free 800 number for access, eliminating the need for magnetic strips. This method rapidly gained popularity. While chip-based smart cards were trialed in France in 1984, substantial market entry occurred in 1995 when Sprint released its Foncard. However, PIN-based cards dominated due to lower production costs.
Recent Developments
About six years ago, the first prepaid mobile phone and card combination was introduced. More recently, online platforms like ephonecards.com.au have emerged, offering ePINS?"electronically delivered phone card PINS. These platforms enable users to compare and choose the best options for their needs.
Future Outlook
Despite the rise of new technologies like VOIP and services such as Skype, phone cards remain relevant due to cost advantages in off-network calls. While VOIP hasn't significantly impacted the market yet, this dynamic may change as global internet access expands. It’s anticipated that a major shift could occur between 2012 and 2015. Meanwhile, Italy resolved its coin shortage by adopting the Euro, moving away from the Lira.
Phone cards continue to be a practical, economical choice in many parts of the world, illustrating their enduring legacy.
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