IMMIGRANTS SPUR PHONE-CARD PROFITS.

Byline: Jennifer Mena Knight-Ridder Tribune News Wire

While the wired ones in Silicon Valley tangle in their multiple home-telephone lines and cellular signals, less-affluent folks are scrambling to the corner phone booth to make their calls with cards that let them leave their change at home.

Prepaid cards - which let the user pay first and talk later - are exploding in growth, driven by immigrants' calls to their homelands. Annual sales revenues have risen from $12 million in 1992 to a projected $2.15 billion this year. About half those revenues are from international calls, according to consulting group Atlantic-ACM, which estimates sales could hit $4.3 billion by 2001.

Immigrants use these cards more because they share apartments, do not want to rack up fat monthly bills or do not have home telephones because they lack credit, analysts say. But they predict phone-card use will increase among the general population in the coming years.

``This way, I pay as I go, and I can't go further than my wallet,'' said Alfonso Maldonado, a 26-year-old restaurant employee who regularly calls family members in Mexico after he wires them money twice a month.

At Pal's Market in Palo Alto, people line up to buy cards in $5, $10 and $20 denominations. Less than a dozen miles from some of the largest technology companies in the United States, the neighborhood market sells 800 cards a month, most to customers who do not have a home telephone.

Pal Market Assistant Manager Rafik Shuman said Mexican immigrants are the sole buyers of his phone cards.

``The Hispanic population was one of the first targets of the prepaid phone-card market because of the frequency of calling from the U.S. to Mexico. Card companies are now targeting other immigrant communities and the overall population,'' said William West, Atlantic-ACM senior research analyst.

``Because the penetration is high in ethnic communities,'' he said, ``the growing knowledge of prepaid cards among the broader public will grow. . . . It will be explosive.''

``It's definitely helped our sales,'' said Jaq Kapoor, president of the 43-store Stop N Save chain in San Jose. ``Mexicans are our top customers, but we have people calling all over the world with these cards.''

Prepaid phone-card customers dial an 800 number and use a code on the card to initiate a long-distance call. The calls can cost 30 percent to 50 percent less than a call from a home phone.

In Mountain View, Heriberto Zuniga says prepaid cards help his customers: ``They rent a corner of a room, so they can't borrow the telephone where they live. It's their way of being in control of what they spend and how they spend it.''

Some immigrants say being forced to pay up front helps them better organize their finances. There's no way to talk for hours unless the caller pays first. When the phone card's value has been used up, service is cut off after a taped warning.

Besides convenience, immigrants say the price is right. For example, a home telephone call during evening hours to central Mexico costs 50 cents to 70 cents a minute, depending on the telephone company. A prepaid card offers calls for as little as 35 cents a minute at any time of day.

AT&T spokeswoman Pat Mallon said that while prepaid calls are often made outside the comfort of home, many immigrants are used to pay phones because they come from countries where phone cards are widely used.In other cities with large immigrant populations, the cards are hot sellers.

``People want better rates. Our customers are calling everywhere with these cards, from Romania to Mexico,'' said Abid Noman, manager of Grand Food Market in the ethnically diverse Albany Park area of Chicago.

At Tony's Pantry in North Miami Beach, Fla., employee Patrick Ford said 1,500 cards are sold each month for calls to Jamaica, Haiti and Cuba.

``These are people with home phones who need lower rates to call relatives,'' he said.

Although callers like the savings and convenience of the cards, a few have experienced the downside. The great demand for the cards has spawned a flock of undercapitalized companies that have sold inoperable cards. Authorities around the country have reported cases of outright fraud.

Some cheaper cards may charge callers a $1 service fee before their calls are connected, so, in effect, the caller receives less time than expected, say producers of cards by well-known companies.

``Fraud is rampant, and California's ethnic communities have been among the top victims. We intend to make a lot of noise about it,'' said MCI spokesman Paul Adams. ``We are telling consumers, `If it looks too good to be true, it probably is.' ''

CAPTION(S):

Chart

Chart: (Color) Prepaid phone cards

The consulting firm Atlantic-ACM, projects prep;aid phone card sales will reach $4.3 billion by 2001.

Knight-Ridder Tribune Graphics Network