Comverse CMO Benny Einhorn met with group editor Joseph Waring at the company's annual Asia-Pacific client and partner conference to explain how its move into post-paid has positioned it for growth in the converged billing world
Wireless Asia: What was the rationale behind your acquisition of CSG System's GSS division, which was completed last December‾
Benny Einhorn: About ten years ago, after the acquisition of a US company with real-time capabilities of networks, we began to build a full prepaid solution, when the need for prepaid started to evolve. By 2005 this business had $200 million in licenses, without support or customization, which put us in the top tier of prepaid vendors in the world and it was our main business.
But analyzing the market, we concluded that in the new era of billing there cannot be a difference between post-paid and prepaid. This is because any customer can be part of the post-paid or part of the prepaid, and the network must offer all types of services to all types of subscribers no matter which way they choose to bill their activities. If this is the case, operators found that any new services they are launching they had to develop two times the software - one to address the needs of the prepaid activity located in most cases in the network and one for the postpaid activities mainly in the IT area. The two systems today are in two different departments, which have to develop and adjust the system according to new plans and new innovations - this doesn't make sense. We see the market moving into what we call converged billing - bringing together the two different systems.
Since we were strong in real-time and prepaid solutions and since we saw this trend toward prepaid and post-paid being integrated into one system, we thought this would be a growth area for us, so we were looking for a post-paid company. There are not that many - maybe three to four besides the biggest Amdocs. After evaluating most of them, we found that Kenan had the best fit for us if you analyze the customer base, the geographic spread, its people and products - everything fit our needs so we could integrate them easily. Also, Comverse's prepaid development center is in the US East Coast, so having Kenan also in the East Coast helped us in terms of integration and reduced the complexity. From all aspects we concluded that Kenan software was the best fit as we moved into the converged billing area, so we acquired the division from CSG.
What is the main driver behind converged billing‾
When you're looking at the post-paid systems and the development of the data applications, you see a phenomena where operators are selling products that are not pure telecoms products. If you want to sell video clips and other content and services, you're starting to be in a situation like a credit card transaction, which requires real-time authorization and verification before the transaction goes to different categories - debit card or credit card, which is like post-paid.
This whole process should also be applied to the mobile phone since operators are selling third-party products, so they have to follow the same logic because they have obligations to the content providers. When you want to buy a product using your mobile phone, possibly you have to do some authorization.
And if you have to check if a customer can buy a specific item, you have to do it in real time. But the existing post-paid systems couldn't mange this because they were not real-time systems.
To address all this data and new applications coming with 3G networks post-paid systems must be changed to handle real-time applications. So the difference between prepaid and post-paid isn't that big any more because the post-paid had to acquire the technology of the prepaid to do real-time activities.
Have your run into any hiccups in integrating with CSG‾
For the development portion we haven't had any issues, as I said both are based in the US East Coast, so the culture is very similar and we haven't had any problems. What's we've done, we've kept the Kenan prepaid as it is and established a new group coming from the two organizations to design and develop the converged solution, taking advantage of the full Kenan billing system, which supports all means of customer management since normally the post-paid systems were richer than the prepaid. To make a really integrated technology, we've taken the relevant people, 60-80, as well as the CTOs of both groups to form the converged group, which is now working on the roadmap of the new billing solution. The first release of the integrated version is coming in September,
Are you talking to customers about the solution‾
We've started to talk to customers. And this is another synergy we are bringing to Kenan - we have a larger worldwide distribution arm than CSG. Now we have a much larger sales and support team promoting the new solution worldwide - a big advantage we've given to the post-paid activity.
What has been the response‾
Customers are divided into several categories. There are mainly two types that are interested. If it is a greenfield operator, no doubt they are looking into converged billing - it doesn't make sense if you have a new license and you're building your activities to buy two systems. There are not so many greenfields right now, but of those looking we have several success stories - we soon plan to announce the first sale of the converge solution, which will be delivered toward the end of the year.
The other category is operators looking to make a change as they move into data. A lot of them have home-grown systems that won't do the job, so when they are looking into a new billing system, they are looking at converged solutions.
In Barcelona [at the 3GSM World Congress] our demo created a lot of excitement. The feedback from discussions was that operators are now looking for converged billing because not only is the technology mature and the environment demanding multiple services, but the mindset of telcos is now ready - the convergence of an organization is important to support the application launch.