THE GOODS : Calling Cards : With their combination of technology and artistry, prepaid phone cards are collectibles you can put to good use.

Bill Kandel, a retired physician, studied the array of wallet-sized plastic cards spread out before him. They were richly illustrated, some with pictures of Santa Claus, others depicting Olvera Street and abstract pastel Los Angeles scenes. Each had the Pacific Bell logo.

“Is there going to be a limited number of these?” Kandel asked.

“They’re very special,” replied Chuck Wills of Pac Bell. “This is a limited test-market collection.”

Kandel bought a handful of $5 and $10 cards. “Pac Bell just started issuing cards, so these will be collectors’ items,” he said.

The Pacific Bell Prepaid Phone Card booth was the place to be on opening day of the TeleCard World West Conference and Exposition last weekend at the Los Angeles Convention Center.

Telecards--prepaid phone cards--are being hyped as the hottest new collectible of the ‘90s, prized for their combination of technology and artistry.

“It’s another step toward a cashless society,” said Kandel, who has been collecting telecards for several years. “What I like is that the cards are functional and also a beautiful item. I love art--walk around this convention and you’ll see beautiful works--like Rembrandts on a credit card.”

A walk around the convention hall suggested nothing has been overlooked by telecard designers. The cards on display illustrate sports figures, artists, charitable groups, snowmen, earthquake relief efforts, animals, political conventions, rock stars, cartoon figures, moon walkers and magazine covers.

“It’s an industry at the entrepreneurial stage,” said Michelle Hartley of the conference staff. “Last year there were 75 companies producing prepaid calling cards, and now it’s up to 500 and continuing to grow. There are even people producing them out of their garage.”

Each telecard includes an 800 number and a personal identification number (PIN) that can be used to make long-distance calls on any touch-tone phone. These are smart cards with technology that can be read by the telephone, said Jackie Maestas, publisher of TeleCard World. The magazine, launched last March, was one of the sponsors of the Los Angeles conference.

The United States is playing catch-up with telecards, Maestas said. “They started in Europe as a matter of convenience, as coin replacement cards for telephones. It’s believed the first ones were introduced in 1976 in Italy, as a way to deter vandalism at pay phones.”

After this utilitarian beginning came the vast number of designs and the collectors. Today, she said, the cards have at least three purposes, and only one of them is to make phone calls.

The cards are also marketing tools. Companies such as McDonald’s and Pepsi use them as incentives for customers. Phone cards have been offered to reward consumers for everything from driving a Lexus to trying on Playtex’s Eighteen-Hour Bra. They’ve been offered free to consumers who rent a Ryder truck, buy two packages of Ball Park products or purchase 10 Kraft budget Gourmet Dinners.

And now in many areas, the cards are being created specifically as collectors’ items, packaged in lavish sets, and promoted as limited editions commemorating everything from famous artists to special events. Some even say the cards have more value if they are in mint condition--unsullied by use to make a phone call.

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All aspects of the emerging industry were evident in the exhibits, which filled the Convention Center’s South Hall. There were companies selling telecard vending machines and kiosks, telecard printing presses, telecard packaging sleeves and display books, and printing, stamping, bar-coding and embossing machines.

There also were companies selling long-distance service. Although phone cards originally were produced by telephone companies, thousands of other entrepreneurs are jumping on the bandwagon, said Jon Rochetti of U.S. Long Distance Inc. “A retailer, like Sears or Kmart, who wants to issue a card can buy a secured block of time from a licensed carrier.

“A computer recognizes the card, and subtracts the time used for each call from your total. So you have three players--the carrier selling the long-distance minutes, the card producers and the marketing agents or distributors selling the cards to end users.”

The lack of regulation and the explosion of card producers has led to “a little fraud in the industry,” Rochetti said. “There have been companies who’ve gone belly-up”--meaning they probably cannot pay the carrier for the long-distance time, rendering their cards useless for calls.

“It’s an industry going through a definite growth period and we can expect a shakeout of providers,” said Michael McLelan, vice president of AmeriVox, a telecard company formed in 1991 by World Telecom Group Inc. in Mountain View, Calif.

AmeriVox’s licenses for collectors’ editions include sets of cards portraying Elvis Presley, cartoonist Mort Walker’s Beetle Bailey, Norman Rockwell’s Saturday Evening Post covers and an elaborately packaged John Fitzgerald Kennedy series.

“What happened is that collectors started snapping up the phone cards in Europe and Asia in about 1987,” McLelan said. “Then the United States entered kind of late, which meant that anything we issued was perceived as having some kind of value.

“An AmeriVox phone card with our eagle logo sells for about $1,250 now, if you can find one. It originally was issued with $100 worth of phone time on it.”

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Because many people don’t know what telecards are, they pitch out potential treasures. Anything produced in small numbers has potential value, according to insiders.

One example was the “Hi, Mom” cards General Telephone put under all the seats at the 1994 Super Bowl. “Most were thrown away,” Kandel said. The cards already are selling for $20 to $40 and are expected to be worth $100 by the end of the year.

Similarly, Universal Studios handed out a 5,000-issue of an “ET” card in 1992 that sells for $70 to $80 today. And a McDonald’s AT&T; card that was test-marketed in Hawaii and New York now sells for $125 to $175.

The cards New York Telephone gave away at the 1992 Democratic convention now sell for as much as $1,200, depending on condition.

With this sort of volatility at work (the business is projected to pass $1 billion by 1996), the industry cautions new collectors to look for card companies with substance.

“Don’t invest a lot of money,” said Maestas, of TeleCard World. “I wouldn’t go to a show and spend $1,200 on a card unless I knew how many are printed.”

“Some companies have come and gone, which usually means the card and image hold no value after that,” said McLelan, who is also chairman of the Prepaid Telephone Card Council, an advisory group attempting to set standards for the telecard industry. “We’re working with the state regulatory agencies to set up guidelines for companies coming in as telephone time resellers,” he said.

“We will be coming out with a code of ethics and a seal of approval showing that the company has adhered to minimum standards in providing long-distance service.”

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For their functional value alone, phone cards are useful for certain categories of consumers, said U.S. Long Distance’s Rochetti. “They’re great for parents with a kid in college (the card can be programmed to only phone home); people on a budget; as gifts for parents with fixed incomes; someone with no home phone, such as people in the military; business people who travel a lot, and people who can’t afford a telephone.”

It was the utilitarian aspect of telecards that brought Chris Bruning to the Los Angeles conference, where he spent $2,200 on prepaid cards.

Bruning runs Fast and Friendly, a service store in South-Central Los Angeles for check cashing, electronic money orders and bill payment. For the first time in the United States, the cards are also starting to make their way into retail stores such as 7-Eleven and Payless Drugs.

“A lot of my customers want to call home to Mexico,” Bruning said. “They don’t have phones and they don’t want to dig for quarters at a pay phone. It’s a rough neighborhood. The $20 card is the highest, and the $10 is the most popular. And after they use them, they can resell them (to collectors).”

Phone cards are also becoming popular for gifts. “Who do you know who couldn’t use free long distance?” asked Eric Stebel, managing editor of TeleCard World magazine, whose Christmas gifts to friends were phone cards printed with his dog’s picture.

“There are an estimated million collectors worldwide, even though it’s just starting to catch on here in the States,” he said.

Betty Houghtaling of Alta Loma, a trading card dealer who expanded into telecards 18 months ago, advised would-be collectors to pick a topic and stick with it. “One of my customers is buying all the Coca-Cola cards she can get her hands on. There are serious collectors buying nothing but Disney. Look for major icons and very limited issues--a 10,000 issue is still collectible.”

Although there are catalogues available that place a value on phone cards, they can’t keep up with the market, she said. “There’s an Internet network for sports cards and now for phone cards too.”

She thinks the cards are a good investment, combining a user-friendly function with value as a collectible.

“And it’s an industry that is stable--telecommunications is not going to go away.”