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midastouch017

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midastouch017

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Sunday, 11/27/2005 5:39:05 AM

Sunday, November 27, 2005 5:39:05 AM

Post# of 3562
Amdocs: Still on top?

Amdocs VP Michael Couture on new challenges from the likes of Comverse, and where the market is growing.

Hadass Geyfman 24 Nov 05 16:28

The development of converged billing is restoring the fighting spirit to the billing sector, and intensifying competition there. After a few fairly quiet years of competition according to rules familiar to all the veteran players, the trend towards comprehensive billing is upsetting the applecart.
The main concern bothering the older billing players is the entry of new players with next-generation systems that employ innovative technologies. Among these new players in the market, Comverse Technology (Nasdaq: CMVT, which acquired GSS (Kenan) from CSG, stands out.

Comverse has a prepaid system that is considered one of the most successful in the market, and the acquisition of GSS has now given it a postpaid system. The combination significantly boosts the company’s ability to obtain market share in the long term.

From now on, Amdocs (NYSE: DOX) will probably run into Comverse in every billing system tender. In mid-November, for example, Amdocs discovered that Australian company Telstra, with which it was already very close to signing an agreement, had changed its mind, and chosen Comverse’s Kenan system.

Amdocs’s systems are capable of handling very large numbers of subscribers, and their rate of malfunctions is very low, compared with the prevailing rate in the market. Comverse therefore does not constitute a real threat to Amdocs, but there is no doubt that Comverse will continue to stubbornly dog Amdcos’s steps.

Nevertheless, it appears that the new developments are not costing Amdocs’s managers much sleep. “The Amdocs 6 system, a next-generation system, provides a converged platform of all the services provided by telecommunications operators, for all types of customers, for all payment methods,” Amdocs VP international marketing Michael Couture says.

”This approach shifts the focus from payment systems to the customer’s needs. Most telecommunications users are business users during working hours, who then become private users. The same is true of both prepaid and postpaid users. The converged system makes it possible to bill a subscriber as one subscriber, with a single invoice, under any payment method that he or she wishes to use.”

"Globes": Aren’t you afraid that Comverse will take market share away from you?

Couture: ”We’re not afraid of any of our competitors. We do respect each of our competitors, but we have great confidence in what we have to offer.”

Where does Amdocs stand in the VimpelCom tender? Why was the Vodafone Ireland project frozen, and has Amdocs been left behind in the battle over integrated billing?

”I can’t talk about VimpelCom or any other customer that we haven’t announced. To the best of my knowledge, no customer froze an integrated billing project because the project was a failure. The reasons for stopping a project are never so simple. It’s impossible to talk in terms of the success or failure of the project. There are many factors involved in such a choice.

”In any case, the Amdocs 6 system is definitely a converged system; it has already been chosen by several customers. Since we announced it, almost no customer in the market has bought a system that isn’t converged. I’m referring to a system that converges prepaid and postpaid on a single platform, as well as voice, data, and triple play services, and all the BSS and OSS systems. That’s the prevailing trend in the market. Our customers have to offer converged services, so they need a converged system.

”Another reason why it’s important to converge prepaid and postpaid systems is content. When a user wants to buy a move or a ringtone, for example, the billing system must calculate in real time how much credit is left in his or her account.”

Can Amdocs’s system work in real time?

”Amdocs’s system can work in real time in both prepaid and postpaid. Today, that’s a requirement for entering the market.”

Apparently, Amdocs’s management recently discussed a proposal that the company stop operating in the prepaid part of the converged billing system. Why was such a proposal raised?

”We absolutely do not intend to exit from the prepaid part. Our system supports every type of service and payment method That’s why it was chosen by China Mobile Communications, Elisa Corporation, SBC Communications, and others. That’s also the reason why Amdocs continues to increase its market share.”

How is Amdocs getting along in the prepaid market, and why aren’t there any announcements of tender wins in the field?

”There are certain regions in the world, especially in developing countries, that are dominated by prepaid services. In these regions, a relatively simple billing system is needed, designed to handle voice services. This is a purely prepaid market, and Amdocs does not operate in it. We focus on tenders in which larger and more complex systems are needed. This target market, which includes mostly tier-1 and tier-2 operators, is the market from which most of Amdocs’s revenue is derived.

”At the same time, we’ve recently been seeing a rise in the level of subscribers’ sophistication in development countries. The way they use communications services is becoming more and similar to the way subscribers in developed countries use them. This development is heightening competition between operators in these countries. This is not yet true of all the developing countries, but it holds for many of them.

”As a result, operators in these countries are interested in more sophisticated systems, including billing, CRM, order management, etc. More sophisticated systems mean integrating postpaid and prepaid capabilities on the invoice of an individual subscriber. In other words, competition is forcing the operators to converge all their systems. They are therefore interested in systems with capabilities of the type offered by Amdocs. That’s the reason why we entered China, and it’s also the reason why we’re succeeding in Russia.

”At the same time, we’re also seeing greater demand by operators in developed countries for converging of postpaid and prepaid. Even in countries at the other end of the spectrum, such as the Scandinavian countries, demand is now rising for combined prepaid and postpaid systems.”

Most current demand for prepaid systems and converged billing systems is in Europe, and that is expected to continue in the next few years. In the US, on the other hand, people avoid cash services - only 3-5% of subscribers use them.

Most of Amdocs’s revenue is from the US, so maybe it really doesn’t pay you to invest in prepaid.

”That’s incorrect. It’s true that users in the US prefer to pay by credit, but the communications market in the US is trying to reach the youth market segment, which is known for its preference for prepaid services. Demand for prepaid services is therefore expected to rise in the US, too.”

What do you think will happen in converged billing in Western Europe?

”I think that, in Western Europe, the importance of converged billing will grow, but the importance of the user experience will also rise. In order for the user experience to provide operators with a competitive advantage, an integrated customer management system is needed. This requires not only converged billing systems, but also a converged platform, including billing, sophisticated CRM, and sophisticated OSS systems.”

Prepaid systems are based on an intelligent network. Why doesn’t Amdocs have an intelligence network?

”Amdocs doesn’t supply networks. Our system communicates with the intelligent networks of network equipment vendors, such as Nortel, Cisco Systems, Hewlett-Packard, and so forth. It works with them through full synchronization, in real time.”

Would you consider acquiring a company that has developed an intelligent network?

”Our business model makes a clear distinction between the billing system and the network. Since we have a system that communicates with the intelligent network, we don’t have to become a network vendor, because, as I said, we work in cooperation with the large network vendors. Following the transition to IP-based networks, billing systems must communicate with larger parts of the network. Our system is very strong in this area.”

What do you think about the prediction that, in the coming years, growth rates in the billing market will drop substantially?

”I certainly think that there will be continuing strong demand for modern billing systems that converge, several systems on a single platform, because of all the trends I mentioned. I believe that a large proportion of demand will be for replacing old systems with modern systems, in the context of the operators’ switch to a strategy of integrated customer management.”

In what other areas do you expect growth?

”We expect the OSS market to grow very rapidly in the coming years. Growth in the CRM market will also be strong, thanks to the possibility of consolidating contact centers, and providing self-service services.”

Let’s talk about cable television. Market sources claim that Amdocs acquired DST not in order to enter the cable and satellite television billing arena, but in order to achieve agreements on the use of DST’s printing firm.

”Whoever told you this couldn’t be more wrong. Cable and satellite television operators are very important customers of ours, not to mention the fact that the telecommunications market is on a convergence trend. We definitely plan to continue selling systems to cable and satellite operators who have become our customers through acquisitions, including Comcast Cable Communications, Cablevision Systems, and DirecTV. We also plan to increase the number of our customers in this market.

”We intend to expand the range of products sold to these customers, and to sell them CRM, order management, and other systems, as well. These customers are now looking for systems that will facilitate ICM for them, and Amdocs can give them such systems.”

In the CRM market, there is a strong trend towards the entry of new players providing software as a service systems. Does Amdocs have any plans in this area?

”No. SAAS systems make it possible to use CRM software on a subscription model basis. Customers buy a term license, and the software vendor provides them with the service. This activity is suitable for CRM providers, which provide services to small telecommunications operators. Amdocs focuses on large telecommunications operators, who need sophisticated systems that support tens of thousands of users, and which are highly scalable. SAAS systems are not designed for tier-1 and tier-2 operators.”

Published by Globes [online] - www.globes.co.il - on November 24, 2005

http://www.globes.co.il/serveEN/globes/docView.asp?did=1000032826&fid=1724

Dubi



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