COPI +15% Nice read... The Patented TeleBlock® Service
repost(from the SEC filings...)
The Process
TeleBlock® is a Do Not Call (DNC) system that automatically blocks outbound calls to state and
federally mandated DNC lists, the end-user's (the telemarketer's) own in-house
proprietary DNC list, and other third party DNC lists. The system blocks these
calls centrally, allowing for multiple offices and/or outsourced call centers to
efficiently manage their DNC lists. The basic TeleBlock® system blocks these
calls in the appropriate telephone company's central office. The system is a
value-added feature treatment applied to the telemarketer's telephone lines
(whether they are Plain Old Telephone Service (POTS) POTS lines, T1's or T3's).
The system functions independently of the telemarketers' telephone equipment.
TeleBlock® is compatible with all key systems, Private Branch Exchange (PBX)
PBXs, predictive dialers, voice-messaging systems, fax broadcast equipment, etc.
Our TeleBlock process automatically blocks a call by interfacing with a
telemarketer who dials a number appearing on any of the applicable DNC lists,
and instantaneously providing a recorded "blocked number" message. Other
available features include standard or customized Special Information Tone (SIT)
SIT tones for predictive dialers, "telemarketer-specific" customized messages,
and the ability of the system to transfer a "blocked" caller to an Interaction
Voice Response (IVR) IVR system or other department in the telemarketing
organization. TeleBlock's® capabilities regarding customized SIT tones allows
for the identifiable disposition of calls within a predictive dialer
environment. The TeleBlock system provides for the customization of CLID
messaging (via DialerIDSM), either in stand-alone mode or in conjunction with
Campaign List ManagerSM.
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A web-based Graphical User Interface ("GUI") allows telemarketers to manage and
administer all of the lists against which they wish to block calls. Available
administrative features of TeleBlock® include: Number override (to allow certain
numbers on lists to be called); full editing capabilities
(additions/deletions/updates); searching capability; and a reporting module with
standard and customizable reports. The system also allows the administrator to
create and change passwords, display Automatic Number Identification (ANI)
ANI/T1 authentication code tables, modify Carrier Line Identification Display
(CLID) CLID messaging (DialerIDSM) and to change lists in real time based upon
ANI/T1's utilizing Campaign List ManagerSM.
The TeleBlock® system reviews each outgoing call by a telemarketer and compares
it against state and federal DNC lists, the specific customer's in-house DNC
list, as well as an "override" (allow) list. Based upon this comparison, the
call is either blocked or processed like a normal call.
Sales Channels And Revenue Sources
By leveraging the VeriSign Alliance Agreement, which calls for VeriSign to host
and manage the TeleBlock® database and enable interconnection to and from
various distribution models, we believe we are best positioned to efficiently
sell licenses and connectivity. With VeriSign providing the backbone of this
process, we have accomplished the dissemination of TeleBlock® access without
having to build or adapt new infrastructure. Our TeleBlock® service is sold to
end-user telemarketers in a variety of ways, all of which produce revenue to us:
· Telephone carrier channel model -- supporting the sales efforts of
existing sales channels of telephone carriers, such as MCI, XO
Communications and Qwest. Telephone Carriers offer our TeleBlock®
product as a value-add for any of its customers which use a telephone
to solicit for goods or services. The telephone carrier charges its
customers a query (transaction) fee for each call attempt made from any
telephone line that has the TeleBlock® feature enabled. We, in-turn,
charge the telephone carrier monthly for all call attempts made by all
of its customers. To date, more than 40 telephone carriers and
resellers, including Vartec, Lightpath, Qwest, MCI, XO, and Paetec have
licensed TeleBlock® and offer it to their customers who telemarket. The
TeleBlock® service is currently being used by many Fortune 500
companies, including Cendant, Marriott, and John Hancock.
· Direct sales targeting strategic prospects that rely upon the telephone
to sell their good and services. Typically, these efforts are geared
toward enterprise customers that have offices throughout the country.
Our direct sales efforts assist these companies in implementing the
TeleBlock® service by locating the right distributor (telephone
carrier) for their specific needs and geography. These customers
receive our service from their carrier and we receive revenue from the
carrier as described above.
· TeleBlock® is also offered by predictive dialer companies (i.e.,
companies that manufacture hardware and software systems that aid
telemarketing entities in efficiently and cost-effectively managing
their outbound calls) - examples include Datatel, Stratasoft, Marketel,
and Nobel. Predictive dialer access to TeleBlock® is accomplished by
connecting the predictive dialer to the VeriSign platform using a
secure VPN connection. We believe that delivering TeleBlock® in this
manner (via IP) provides two additional advantages. First, we believe
it allows for TeleBlock® to be easily implemented by any offshore
telemarketing company that calls in to the United States. Each such
offshore entity makes use of its predictive dialer(s) to directly query
the TeleBlock® database via the internet, as opposed to having to rely
on a local telephone carrier that may not be able to obtain a
TeleBlock® license. Currently, via our VPN Service, we have contact
centers utilizing TeleBlock® from such countries as India, Dominican
Republic, Philippines and Canada. Second, it gives domestic companies
that have a contract with a telephone carrier that does not currently
license TeleBlock® the ability to obtain the TeleBlock® service via its
predictive dialer(s). The dialer manufacturer charges its customers a
query (transaction) fee for each call attempt made from its equipment
that has the TeleBlock® feature enabled. We, in turn, charge the
manufacturer monthly for all call attempts made by all of its
customers.
· TeleBlock® is also offered by hosted "Sales Force Automation" and
"Customer Relationship Management" ASPs such as Sales Lead Management
and VanillaSoft. These Web-based software services embed access to the
IP-based TeleBlock® service directly into their online systems. Users
of these ASP systems can then make telephone calls directly from the
Web-based GUI interface and have each such call screened and blocked,
via IP, against all DNC lists via TeleBlock®. These companies charges
their customers a query (transaction) fee for each call attempt made
from their equipment that has the TeleBlock® feature enabled. We,
in-turn, charge the company/companies monthly for all call attempts
made by all of their customers
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The Industry And Competition
We believe there is no direct competition to CSC, and TeleBlock® (our patent
protection) prevents any company from providing a service that screens and
blocks calls against DNC lists via the SS7/IP networks. However, there is one
company that provides a service that is in some ways similar to TeleBlock®, and
there are other companies that provide what is known in the industry as database
"scrubbing" services.
Gryphon Networks of Norwood, Massachusetts, offers a product similar to our
DialBlock® technology product. We believe our TeleBlock® product is different
from the Gryphon DNC compliance product since the Gryphon product requires its
users to dial an access code, followed by a PIN number, to make use of the
system. Once this is completed, the user completes a session of telemarketing,
and the numbers dialed during this session are screened and blocked against DNC
numbers via a system maintained by Gryphon. We believe the Gryphon system does
not reside, like TeleBlock®, on the SS7/IP network, so the screening/blocking
does not take place via the user's telephone carrier. Instead, the
screening/blocking process is completed by an "off-network" system created and
managed by Gryphon. With the Gryphon system, each individual user must log in
(via the access code and PIN number) in order for the screening to take place;
accordingly, there is potential for individual callers to bypass the log in
process.
There also are many companies that "scrub" lists for telemarketers. Scrubbing is
another word for database merging and purging, as applied to the removal of DNC
numbers from prospect lists. We view scrubbing as a way to increase efficiency
in a call center by allowing calls to go to users who are more likely to have an
interest in the product being offered; however, we believe the enforcement
actions taken against companies across the country for DNC violations highlights
the fact that we believe scrubbing does not achieve the 100% compliance required
under state and federal DNC laws.
TeleBlock® enables telemarketers to meet the compliance demands of the agencies
enforcing DNC rules. We believe TeleBlock® leverages the reliability of existing
telecommunications technology to create the only DNC compliance system that
screens and blocks outbound calls via a telemarketer's telephone carrier. We
believe traditional database scrubbing techniques lack the centralization and
standardization necessary to achieve 100% DNC compliance. It has been reported
that even the most sophisticated of scrubbing campaigns will consistently have
an error rate in the range of 0.5% to 3.0%. As an example, assuming a company
makes one million calls per month, and has a DNC scrubbing error rate of even
0.1%, the company faces a potential annual exposure of over $130 million in
fines at the federal level alone. We anticipate, therefore, that DNC compliance
will be of paramount importance for any company that telemarkets.
Over the next two years, we believe CSC needs to gain significant market share
by seeking out Fortune 500 clients, increasing our presence in the call center
industry, and expanding our product availability through additional channels. We
anticipate this will be accomplished through the development of a strong sales
team and marketing organization.
Although we believe there is no direct competitor to our TeleBlock® process,
certain companies may have products and provide services which indirectly
compete with TeleBlock®. Competitors most likely include list brokers, scrubbing
companies, computer telephony providers, systems integrators, hardware and
software suppliers. Many of our competitors have substantially greater
financial, technical and marketing resources, larger customer bases, longer
operating histories, greater name recognition and more established relationships
in the industry than we do. As a result, certain of these competitors may be
able to develop and expand their product and service offerings more rapidly,
adapt to new or emerging technologies and changes in customer requirements more
quickly, take advantage of acquisitions and other opportunities more readily,
devote greater resources to the marketing and sale of their services and adopt
more aggressive pricing policies than we can. We cannot be sure that we will
compete successfully with our existing competitors or with any new competitors.
Recent Developments and Our Strategy
In 2005, we entered into the emerging world of VoIP communications. In order to
accomplish this, we formed Citadel. Citadel has entered into a wholesale
reseller agreement by which it will able to sell TeleBlock®-enabled dial tone,
via VoIP, across the United States and throughout the world. The service is
currently operating with customers in a Beta test environment. The commercial
launch date for this additional product offering is scheduled for late third
quarter 2006. The Citadel TeleBlock® service provides us yet another avenue by
which TeleBlock® can be offered to the teleservices industry.
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In 2005, we also entered into an agreement with the ATA to provide to its
members an online system designed to assist telemarketers to easily fill out
voluminous state commercial registration forms, which we call the Registration
Guide. This online service is currently in development, and we believe it will
be ready for release by June 2006. We anticipate this service will become a
component of the regulatory guide web site allowing for immediate cross-sell
opportunities from existing subscribers.
We have been granted patent protection in Greece for a modified version of the
TeleBlock® system; and we believe this patent applies throughout the European
Union. We believe that having this patent protection in place will enable the
Company to deploy TeleBlock® technology world-wide, as the EU countries move to
implement DNC programs similar to those in the United States as well as the
number of off-shore telemarketing companies that call into the United States
continue to grow.
Government Regulation
Teleservices companies are confronted with a patchwork of state and federal
statutes and regulations that govern virtually every element of their
operations. These rules are largely focused on outbound calls (i.e., calls
originating with the marketer being made to consumers), but increasingly,
inbound calls (i.e., originating with the consumer) are falling within the
regulatory purview as well.
At the federal level, the Federal Communications Commission (the "FCC") has
issued regulations in response to Congressional passage of the Telephone
Consumer Protection Act in 1991. The Federal Trade Commission (the "FTC") has
also issued comprehensive regulations called the Telemarketing Sales Rule
("TSR"). These rules govern virtually every aspect of the telemarketing process,
including the creation of a national DNC registry, the use of predictive
dialers, identification and payment disclosures, prohibitions against
misrepresentations, and many other areas.
Even though this comprehensive federal regulatory scheme is in place, all states
have additional and/or different rules and regulations that impact the
teleservices industry as well. Most importantly, there are 17 states that still
operate separate DNC lists. In addition, the majority of states have
requirements governing commercial registration of telemarketers, as well as
rules governing a multitude of areas that are more restrictive than comparable
federal rules.
There have been hundreds of enforcement actions regarding the state-run DNC
lists, and dozens of such enforcements at the federal level.
