First Manhattan, now the world
A year ago, former USIT product development manager Colman Lydon calmly outlined his plans to provide Irish students toting J1 visas with tri-band phones capable of working in the States during the course of their summer sojourn working there. His company, Fonepool.com, had identified what it regarded as the perfect market – each year up to 10,000 Irish J1 visa holders travel to the States, earning on average €2,500 during a 12-week period – worth in effect €25m.
"Our first experiences last summer taught us a few valuable lessons. Through the patterns of usage we managed to hone in our service to possibly address other J1 visa holders from central and eastern Europe. Our market has effectively grown from a captive audience of 10,000 last year to 60,000 in 2004. The market gets bigger when you think that in summer and winter more than 200,000 people visit the States on a J1 visa and that's the market we want to capture with our phone sales," he said.
Targeting a young and vibrant market – full of consumers keen to ensure that they have prepaid mobile services during their working sojourn in the States – might seem easy but as Lydon points out, the complicated nature of the US mobile market means that prepaid services account for less than 10pc of phone services stateside.
Lydon explained: "It's very hard for prepaid phone users there to find stores that sell top-up vouchers, which European and Australian phone users are unaccustomed to. As well as this, cross-Atlantic text messaging is only in its infancy, so as you can imagine we ran into a few teething problems."
To counter these problems, Fonepool.com has entered into a strategic two-year contract with T-Mobile USA, the fourth largest provider of phone services in the States. According to Lydon, T-Mobile USA, by virtue of its European parent Deutsche Telekom, is open to providing prepaid services and providing international SMS services.
"Last year, the providers we would have worked with didn't support international SMS and weren't in favour of prepaid services, which is contrary to what Irish and European mobile users are familiar with. In the US, the majority of the market is postpaid and to actually get a postpay contract you would need a credit history and pay a US$400 deposit; not something that would interest student workers. T-Mobile USA, on the other hand, were open to European methods and we chased them aggressively."
Under the Fonepool.com service, student workers can buy a tri-band phone for €87 that works with the TDMA (time division multiple access) services across the US, including €40 credit. "They're entitled to keep the phones and use them again if they return the following year. Otherwise we would reimburse them 20pc of the cost of the phone if they choose to return it.
"We succeeded in getting over 1,000 Irish J1 visa holders during the summer and a similar amount of Australians and New Zealanders during the winter months. Now that the teething problems have been ironed out through our deal with T-Mobile USA we expect to grow this even further to include J1 visa holders from other parts of Europe," Lydon explained. "Our total market this year will have grown from three countries to more than 20 countries."
According to Lydon, because the US is not favourably disposed towards prepay services, finding stores that would enable top-up services has proved difficult for student workers. "We spent some time figuring out how to get around this and have come up with a technological solution to address the problem." He explained that Fonepool.com is working with a Dublin-based mobile software company to deliver an application that enables students in the States to simply text message a demand for fresh credit to a specific stateside mobile number. This in turn would trigger a transaction for the appropriate amount to be charged to the student's, or their parent's, credit card.
"Remote recharge is something we have been working towards since day one. The students can buy credit when and where they please by simply sending a text message. Our partner on the payment side of things is Bank of Scotland's WorldPay division. We currently process sales in five currencies, including euros, sterling and US, Australian and New Zealand dollars and will soon include other currencies as well. It's up to the students themselves if they want to opt in or out of the SMS payment option.
"From 1 June we will be selling to more than 20 countries. While Irish and UK students are solid enough we expect student workers from Central and Eastern Europe to be a robust market," Lydon said.
In conclusion, Lydon said that the company is currently planning to launch similar services to the J1 programme to the 15,000 young Irish people who travel to Australia every year under the Work Australia programme. "We have signed a distribution agreement with Australian mobile phone operator Optos and we tested the service during the recent Rugby World Cup. We envisage good business opportunities and we plan to launch the service over the next two months."
By John Kennedy