The stall is the strangest in Lewisham market in South-East London. Sitting at an empty table, listening to an old radio and dangling his legs, he could have been mistaken for a typical local if it wasn?t for his heavy Eastern European accent.

?Buy two, get one free, mate,? he mumbles while shuffling a pack of some 40 cards. Posters stuck on a cardboard next to him give a better idea of his wares: international phone cards.

Similar posters are glued across London and the whole of UK, from corner shops to petrol station forecourts and newsagents. And now, it has hit the local market. The international phone card business is booming. More than 10 million phone cards are sold each month in Britain. The annual sales top the £ 500 million (Rs 25 billion) mark.

Practicality is the secret of its success. Buying a phone card means pre-paying for calls. Using it could not be easier. The customer calls a freephone number, punches in a PIN number revealed by scratching off a silver panel at the back of the card, then dials the desired international number.

The ever-increasing UK ethnic population and tourists make up the biggest chunk of the market as both categories have a strong need to call friends and relatives in their countries of origin. Some users have no choice but to use pre-paid cards. In UK, there are about 6 million adults without a bank account and about 10 million without a credit card. Hence, they cannot apply for a normal landline.

Others prefer prepayment as it allows them to call an international number from any phone while not being tied up to a contract or having to worry about bills. Such a formula has already proven successful in the mobile phone industry. Latest figures from Ofcom, the new regulator, indicate that more than six out of each ten mobile owners in Britain have opted for the prepaid method.

<B>Leaving no trace whatsoever</B>

Discretion is also a key issue with regard to international calling cards. Some use them for both local and overseas calls simply because they leave no trace whatsoever. The freephone number never appears on the monthly telephone bills even if calls are being made from home. The receiver?s telephone can neither identify nor record the caller?s number.

However, the main attraction of phone cards remains the low rates offered. Transatlantic call prices start from 2p (one rupee) a minute and they keep falling every year. That?s because promoters, whether big or small operators, get the best deals by wheeling and dealing. They minimise their overheads and buy excess space on existing phone networks on the cheap. Such capacity is available as a result of over-investment by telecom giants, especially in undersea intercontinental fibre optic cables.

The lower rates encourage people to speak more, thus beefing up operators? revenue. ?The cost of calling India has dropped a lot. Perversely, as it?s cheaper, people spend a lot longer talking, which actually costs them more,? says Giles Redpath, former Alpha Telecom CEO. The company sells nearly 2 million phone cards monthly.

Such figures tend to hide stiff competition. There are scores of companies vying for a market that was a monopoly 20 years ago. Ofcom figures reveal that 14 billion minutes of international calls were made in UK. The regulator estimates that 17 million minutes of calls are made from UK to Mauritius annually.

<B>Buy one, get one free promotions</B>

British Telecom still holds about 45% of the market in terms of revenue and a third of the volume of overseas calls made. Smaller operators are catching up fast. Ofcom believes 11% of residential subscribers are already using indirect access (IA) operators in addition to their fixed line supplier. Latest figures show they made more than three billion minutes of international calls annually using IA operators.

The result is an ever-increasing competition in the market. Those with a landline can now open an account with an IA and punch in a four-digit prefix before making international calls to benefit from cheaper rates. On the phone card front, vouchers worth £5 are sold at £3.50 or in ?buy one, get one free? promotions.

With such rates, sales are soaring but public confidence often hits the wall due to regular scams. Some operators go out of business but their cards remain on sale, which means that some customers do not get the service they have already paid for. Others mask their prices. The low rates tend to apply at specific times while different surcharges apply accordingly.

Operators like Avanti Worldwide are open about this. A call from UK will cost 31p a minute but might prove more expensive depending on the phone used: payphone, mobile or landline. Some cards have an expiry date, which can be as soon as three weeks after the first use? if you manage to get connected. Because they are buying excess capacity, some small operators sometimes have no space to fit more calls in, so users end up facing an irritating engaged tone or poor quality service.

<B>Eliminate rogue traders</B>

At times, the rates advertised on posters are fakes or the operator?s version of a minute is only 40 seconds. In the past months, half a dozen alternative access companies have been found guilty of overcharging customers through their phone cards. Most offenders pass through the net by closing down a business only to reappear under another brand name.

?We can?t do anything about these because we do not regulate this side of the market. Phone cards fall under normal consumer laws,? an Ofcom spokeswoman explains.

Despite these shortfalls, international phone cards have given rise to a new business line. The rolling out of high capacity digital lines across UK has enabled the creation of cheap call centres. These shops, which cater mostly for ethnic communities, often serve as cyber cafés while selling a range of phone cards and providing free telephone access in dedicated booths.

Meanwhile, the main alternative access operators have joined forces to eliminate the rogue traders. The European Calling Card Services Association (ECCSA) will now be monitoring standards. It is high time too. Especially as some phone card companies are soon expected to target international money transfers, a £115 billion market?

Ryan Coopamah Outlook correspondent in London