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Middle East Report

Good News for the NewcomersAll of this is very good news for small com-panies wishing to enter the BSS market with off-the-shelf products, and for small existing players. Yet, it is far from being great news for the large billing players, especially Amdocs, whose large portion of revenue derives from customization.

In recent months, Amdocs employees in Israel have become concerned that the transition to VoIP networks and the ex-pansion of the company’s R&D center in

India will reduce the demand for Israeli programmers. Many of them are now seeking jobs with Comverse, which is focusing on selling software licenses and maintenance, leaving customization in the hands of integrators like Accenture.

For the moment, however, this con-cern appears unduly excessive. Despite the increasing trend towards VoIP, opera-tors will not simply toss out their current networks. The transition to IP networks will be gradual. Operators will probably continue to use TDM networks, together with next-generation networks, for at least the next 10 years. Furthermore, bill-ing projects for major operators will al-ways pose the challenge of handling large volumes of data. Therefore, major billing vendors like Amdocs, capable of support-ing large systems, will always enjoy an advantage with major operators.

Amdocs has lately become the sole ven-dor of three American communication gi-ants, AT&T, Singular and Sprint-Nextel. In light of these developments, it seems that despite the challenges, Amdocs’s manag-ers have no reason for insomnia.

Getting to Real-TimeRoy Safit, VP of business development at the Israeli billing company MaxBill, says, “No doubt, large operators with tens of millions of subscribers will always need large, scalable, stable billing systems, capable of handling this kind of traffic. And yet, the sharp drop in infrastructure costs, due to the transition to IP net-works, could lead to a demand for lower billing systems prices. In many cases, competition between operators over IP services will depend on a US$0.01 per minute difference. With such low mar-gins, operators will think twice before agreeing to pay tens of millions of dollars for a billing system.”

“The transition to VoIP therefore poses a commercial challenge to the large ven-dors, and at the same time, open the door to smaller billing players,” says Safit. “MaxBill’s integrated platform of billing, CRM and other BSS components, is pre-configured and enables the operator to offer bundles of services over IP.”

Formula Telecom Solution’s VP of Marketing and Business Development Yair Sakov says, “The fact that interfaces between IP networks and BSS systems are standard, makes customization for bil- ling projects much simpler. Nevertheless, no change is expected in customization of BSS systems with operators’ IT sys-tems. This customization still must be made according to each operator’s unique business process. Hence, on this front, costs of billing projects are not expected to drop.”

Sakov adds that “Self-service systems are enabling subscribers to change their services bundle by themselves. They can sign up for one service in the morning and replace it with another that same eve-ning. This requires a real-time system of CRM and billing. FTS offers such a pre-integrated platform of CRM and billing.”

FTS CEO Amos Sivan explains that “When a subscriber changes his bundle of services by himself, the change must be updated in real time throughout all other systems. That requires a unified platform of billing and CRM. Today, most BSS sys-tems are integrated in hybrid fashion. The transition to IP networks will require a transition to systems that communicate with each other in real time.”

“Billing systems in IP networks must handle a wide variety of bundles of ser-vices, combining calls, content, etc.,” adds Sivan. “That will require very so-phisticated systems of date collection and processing. For example, users will have equipment to verify that they’re getting the promised bandwidth for which they’ve paid. Whenever bandwidth drops, they’ll get a refund. Next-gen BSS systems must collect data from such equipment. They will also have to distinguish between dif-ferent types of content. For example, us-ers will pay a lower price for a movie that includes commercials and a higher price for a movie without commercials.”

cVidya Networks’ Co-founder, Presid-ent, and CEO Alon Aginsky says, “Data enrichment and parsing must be per-formed on IP networks, because the data packets must be assembled into an IPDR [Internet Protocol Detail Record, a term derived from the traditional telecom term CDR, or Call Detail Record]. The amount of data generated on IP networks is enor-mous. Each time the user dials on VoIP, for example, an IPDR is created, even if no call takes place. There will therefore be a need for very large storage systems, and mediation systems capable of bear-ing very large loads.”

As for rating engines, Aginsky says that “There are currently at least four differ-ent business models for billing on IP net-works. Therefore, there’s a need for rat-ing engines that can handle all of them. One model is flat-rate, designed mostly for private customers. Business custom-ers will be offered a VoIP premium and guaranteed a higher SLA [Service Level Agreement]. Under a third business model–of payment by volume–the price for minutes used above the agreed vol-ume will be lower. The forth business model takes into account payment for value-added services, such as translating voicemail messages to text.”

Regardless of whatever business model eventually becomes dominant, there’s no doubt that the next few years will be very eventful for BSS and OSS players. V

Hadass Geyfman, our Middle East Editor, has over 13 years of experience as a tele-com and technology researcher and reporter. Contact her at hgeyfman@vonmag.com.

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sMiddle East Report

by Hadass Geyfman

IP has shaken up the formerly sedate world of billing.

Revolution in the Billing Market

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As the billing market revolution gathers momentum, many Israeli high-tech companies find themselves at the nexus of hopes and challenges.

The strengthening of the fixed-mobile convergence trend, and the transition to VoIP infrastructures are liable to force major billing companies to cut prices and re-group.

At the same time, these trends also cre-ate new opportunities for small compa-nies developing innovative technologies for BSS (Business Support Systems) and OSS (Operations Support Systems) on IP networks.

These occurrences are expected to have a large impact on a significant number of Israeli technology companies. The Israeli high-tech industry consists mostly of companies developing solutions for the telecommunications market. The billing sector, along with all its derivatives, con-stitutes a handsome share of these com-panies.

Israeli-based billing giant Amdocs leads the global billing market. With nearly 4000 employees in its R&D center in Ra’anana, near Tel-Aviv, Amdocs has in-spired many Israeli entrepreneurs (some of them ex-employees of Amdocs) to de-velop technologies for the BSS and OSS sectors. As a result, during the last five to six years, a growing number of Israeli companies have developed solutions for this market.

But it was only last October when a ma-jor upheaval occurred. Following its ac-quisition of CGS’ GSS division, Comverse, another Israeli-based company, made its debut on the global billing market’s center stage. Comverse, a vendor of enhanced

services for communication operators, has supplied in recent years prepaid-bill-ing systems, mostly to Tier-3 and Tier-4 operators in emerging markets.

Comverse’s prepaid systems have a good reputation for doing real-time bill-ing, but in the absence of a postpaid sys-tem, the company remained a marginal billing player. GSS, a vendor of postpaid-billing systems, brought a handsome dowry to the merger, in the form of nearly 150 postpaid customer companies.

Although Amdocs remains the unchal-lenged market leader (its largest competi-

tors worldwide are American companies Convergys and CSG), Comverse’s entry is definitely expected to change the nature of the competition, both in the Israeli labor market and in the global billing market.

The Price of BillingThe main challenge the transition to VoIP poses to the billing players is expected to be the pressure on prices. Large operators in developed markets currently pay up to tens of millions of dollars for billing sys-tems. An outsourcing project can amount to many hundreds of millions of dollars. However, the dramatic plunge in commu-

nications equipment prices accompany-ing the transition to VoIP networks will enable telecom operators to reduce prices for their subscribers. It’s reasonable to as-sume that they will demand that billing system prices also be cut.

Today, customization accounts for the largest costs in billing projects. One type of customization involves integrating the BSS systems with the operator’s IT sys-tems, which contain all the information about the subscribers, such as pricing plans, product offerings, etc. Since the process of adding a new customer to the system differs from one operator to an-other, every billing project must include this type of customization.

Another type of customization involves integrating the BSS systems with the network (through a mediation system). TDM networks include a great many kinds of equipment, including old legacy equipment, equipment acquired as a re-sult of mergers, etc. Each of these is based on a different technology, and they need to be integrated with the BSS systems. It’s therefore necessary to develop a unique interface between each type of equipment and the BSS systems. Developing these interfaces requires specific expertise, and therefore increases costs.

Furthermore, long-term contracts at times oblige billing vendors to support old billing systems even if they serve few users. That too increases the costs of bill-ing projects.

The transition to IP networks will make this type of customization much simpler, because this problem doesn’t exist in VoIP. Since the IP network is standard, there are no multiple technologies, and interfaces between the network and the BSS systems are simple and standardized.

Despite the increasing trend towards VoIP, oper-ators will not sim-ply toss out their current networks.