'Defects' delay Clearwire transition to Amdocs billing software

According to Clearwire's (NASDAQ:CLWR) latest quarterly filing, the company has dumped more than $100 million during the past year and a half into an Amdocs billing platform that has "encountered unanticipated delays resulting primarily from the discovery of defects in the new Amdocs software code." As a result, Clearwire warned the implementation of the new customer care and billing platform could be pushed back into next year, and that the situation could result in "additional, unplanned costs to the company."

The issue comes at a difficult time for Clearwire, which has been raking in new customers while laying the groundwork for tests of LTE network technology that would result in the WiMAX provider switching over to LTE. During its second quarter, Clearwire added 722,000 total net new subscribers, and raised its 2010 subscriber base forecast to 3 million, up from around 2 million. The company announced it will commence LTE network trials later this year.

Clearwire in 2009 inked a seven-year deal with Amdocs for the billing vendor's CES 7.5 products and managed services, products that support Clearwire's retail and wholesale businesses. (Sprint Nextel (NYSE:S), Best Buy, Comcast, Time Warner Cable and others offer WiMAX services through Clearwire's wholesale business.) The Amdocs' product suite includes customer management, self service, billing, mediation, ordering and other products. Under the terms of the agreement, Amdocs said it would manage Clearwire's existing business-support systems and the conversion to CES 7.5.

Clearwire first disclosed its troubles with Amdocs in its first quarter 2010 Security and Exchange Commission filing, and again highlighted it in its second quarter filing. The company said that it has been forced to use its existing billing and customer care system while work continues on the Amdocs platform.

Additionally, Clearwire warned that "if we are unable to complete the development and implementation of the new customer care and billing systems being developed by Amdocs, and to transition from our existing systems to such new systems, in a timely manner, or at all, we may be forced to continue to rely on and upgrade our existing systems or to procure new systems from other vendors. In either case, we would likely incur significant additional delays and expense in completing modifications to our existing systems, or in procuring new systems, that meet our future business needs."

Representatives from Amdocs did not immediately respond to questions on the topic.

"It is not unusual to encounter some challenges during any large scale implementation and we have been working closely with Amdocs over the past several months to resolve any implementation concerns," Clearwire said in a statement. "We have recently achieved a significant implementation milestone with the new Amdocs platform and we are pleased with this progress. In the interim, our current billing platform that is also supported by Amdocs is working and scaling appropriately."

For more:
- see this Clearwire SEC filing

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