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Middle East Report
deal: It will recruit and handle all rela-
tionships with the content providers and
the operator will deal only with Qpass;
i.e, operators are not required to search
and manage relationships with hun-
dreds or thousands of content providers.
Instead, they deal with one entity, which
is responsible for all content needs.
In mid-May, Qpass announced a new
platform enabling content providers to
sell their content directly to users, with-
out using an intermediary portal. This
means that Qpass is now offering billing
platforms for all three channels: operators’
portals, independent portals and content
providers who prefer direct sales.
One of Qpass’ main competitors is the
Israeli company Trivnet which, in the past,
was very interested in acquiring Qpass.
Negotiations between the two companies
reached a very advanced stage, but were
eventually broken off because of a dis-
agreement over the distribution of shares.
In addition to a micro-payments sys-
tem, Trivnet provides a payments settle-
ment system between content providers
and operators, similar to that of Qpass.
The prevailing opinion in the telecom-
munications market is that Trivnet’s
technology (of its payments settlement
system for operators) is superior to that
of Qpass.
The consideration that actually de-
termined Amdocs’ decision to acquire
Qpass, however, was Qpass’ installed
base, which has made Amdocs, formerly
a marginal vendor of billing systems for
the content sector, the largest vendor
of billing systems for content in North
America. Amdocs also realized there was
important value in acquiring Qpass’ posi-
tioning and brand name.
Amdocs’ challenges
In any case, the acquisition was only the
first step. Now comes the integration
part. This usually takes about two years,
during which Amdocs will have to meet
several challenges. The primary chal-
lenge will be to allow Qpass to continue
prospering, and to leverage it, similar to
the Clarify model (purchased in 2001).
Qpass, which was a start-up before the
acquisition, has a start-up culture, which
is far different than Amdocs’ less-flexible
corporate culture, characteristic of large
enterprises. One should hope that Amdocs
does not repeat the mistakes it made when
it acquired XACCT, for example, whose
business has failed to make significant
progress since its acquisition. XACCT was
swallowed up in Amdocs’ long corridors,
and its brand name disappeared.
Now that it has spent US$270 million
on acquiring Qpass’ brand name and
positioning, it’s hoped that Amdocs has
learned its lesson, and will allow Qpass
to continue operating as an independent
unit, while leveraging its capabilities in or-
der to preserve the asset of its leading po-
sition in the market of billing for content.
Another challenge will be integrating
Qpass’ systems with Amdocs’ unified
platform–“Amdocs-7”, in order to enable
Qpass’ systems to work with Amdocs’
other products. A third challenge consists
of implementing sales processes in coop-
eration with Qpass’ sales people, who are
not an organic part of Amdocs.
A fourth challenge will be integrat-
ing Qpass’ system with Amdocs’ Part-
ner Relationship Management system.
In addition to interconnecting for roam-
ing, Amdocs’ PRM system performs set-
tling payments between content partners.
This element in Amdocs’ system overlaps
Qpass’ system.
Yet another challenge will be for
Amdocs to combine the two systems, so
that its salespeople can offer the custom-
er a single system. If Amdocs sells each
system separately, it will generate com-
petition between its two units, thereby
undermining its own prices.
Direct to the Customer–Pro’s and Con’s
As I mentioned, Qpass announced a new
platform that enables content providers
to sell their content directly to consum-
ers. The company explained that selling
through an operator leaves the content
provider with much less control regard-
ing its relationship with end users.
First, the content provider is lacking
information concerning the users’ prefer-
ences, about who purchased what, about
what type of other content the user might
be interested in, demographic distribu-
tion of each item, etc. Operators are re-
luctant to reveal these details, and con-
sider them as confidential.
Second, operators are usually slow
and too rigid to keep up with the mass
of available content. Third, the content
provider gets access to a customer base
of only one network (of each operator).
However, using the operator’s portal has
some advantages such as reliability in
terms of settlement, Quality of Service,
transcoding and the handset-optimized
presentation of content.
As for independent portals, despite the
large popularity that this method is gain-
ing, they, too, have some disadvantages.
Except for less control and lack of infor-
mation about the consumer (as in the
case of operators’ portals), each content
provider is just one of many. Moreover,
independent portals are lacking of tech-
nical mobile know-how.
The advantages of independent portals
over the operator’s portal are the ability to
reach a broader customer base, since the
independent portal distributes the content
to many operators. The independent por-
tal also provides deep know-how in terms
of customer relationships, including mar-
keting, content-management, promotion,
ways to attract customers, etc.
According to Qpass, its new platform
is an end-to-end solution that allows
content providers to face the challenges
stemming from direct marketing, includ-
ing managing and hosting content, set-
ting up shops for WEB and WAP, man-
aging handset diversity and adapting
content to handsets, attracting potential
consumers to the platform, guarantee-
ing independent payment, charging, and
scalability. The content provider needs
just the content. The rest comes through
the platform. V
Hadass Geyfman, our Middle East Editor,
has over 13 years of experience as a telecom
and technology investigative reporter. She
can reached at hgeyfman@vonmag.com.
InternationalFocus
Middle East Report
by Hadass Geyfman
The radical changes in the mobile-content market have a signif-
icant effect on many Israeli technology companies. By acquir-
ing Qpass, Amdocs harnessed this trend to increase its busi-
ness and became the biggest content-billing provider in North
America. Will Comverse and Convergys do the same?
Mobile Content
InternationalFocus
The content-over-cellular market is
going through an upheaval, and the bill-
ing providers must prepare accordingly.
After several years in which the cellular
operators spent heavily on tools for man-
aging content and marketing it through
their portals, and in setting up depart-
ments dealing in contracts with content
providers, the market is taking a sharp
turn in a different direction.
More and more content providers are
switching to marketing of mobile-con-
tent through independent portals, or
even directly to users. In Europe, about
one third of the content designated to
cellular is already being sold outside the
operator’s portal, and the trend is contin-
ually gaining momentum. This trend is
even more pronounced in the US, where
content providers’ brand names are much
stronger than those of operators.
Most of the cellular operators already
realize that the content being transmit-
ted over their infrastructure will soon
be beyond their control and will not be
marketed through their portals. They
are now shifting their resources from the
current content-enabled infrastructure to
purchasing sophisticated infrastructure
for customer care, billing, authentication
and so forth.
This trend has a significant effect on
many Israeli vendors whose target mar-
ket is mobile-content, such as Mobilitec,
a provider of content management sys-
tems; Bamboo, a provider of push-video
systems; Adamind, a provider of trans-
coding systems and others. It also affects
the business of many applications provid-
ers and vendors of billing and customer
care systems.
The operators will now focus only on
providing specific content that will gen-
erate significantly large revenue for them,
such as music. Most investment in mo-
bile-content–the vast majority of which
is in marketing and packaging–will be
made by external independent portals.
As long as content goes through their
portals, operators are controlling its man-
agement, including decisions about cate-
gories, which content will, or will not, be
promoted, etc. They have an important
function in the value chain, and therefore
receive a larger share of the revenue.
No doubt in an effort to increase rev-
enue, operators would prefer to maintain
their control over the content, host it on
their servers and keep a larger share of
the fees, while minimizing errors and
revenue leakage. However, an increasing
number of content providers are deter-
mined to take the new path.
As the revolution gathers steam, the
independent portals will become the
strongest channel for marketing content,
and the operators’ share of revenue from
mobile-content will gradually decline.
The independent portals will manage and
market the content, and distribute it to
the operators. Instead of five operators,
the content provider will work with only
one portal.
Amdocs is taking steps
Israeli-based billing giant Amdocs, which
identified these radical changes, acquired
the American company Qpass, a vendor
of billing systems for content, at the end
of May 2006. Qpass’ system provides a
set of billing services for payment settle-
ments among content providers, opera-
tors and independent portals.
The main advantage of this acquisi-
tion for Amdocs is that Qpass has the
largest market share in North America in
content-billing. Its customers comprise
many US carriers, including tier-1 opera-
tors: Cingular, T-Mobile and Sprint.
If we look at Amdocs’ largest competi-
tors, we can see that neither Convergys nor
Comverse provide content-billing systems
per se. Based on the Amdocs-Qpass deal,
they too may wish to enter this market.
Qpass, which started its activity with
a payments settlements system for ring-
tones, currently provides a platform that
manages all types of payments settle-
ments between content providers and
their content-partners (operators and in-
dependent portals). It determines which
content the user downloaded, how many
items he purchased of each type, and the
profit rate for each type. Then, it calcu-
lates the division of revenue between the
content partners and provides an indica-
tion of the service’s popularity.
Qpass offers the operator a package
One of Qpass’ main
competitors is the
Israeli company
Trivnet which...
was very interested
in acquiring Qpass.Qpass’ system
provides a set of
billing services
for payment settle-
ments...
6:25 pm, 7/31/06By Richard Grigonis at 9:45 pm, 7/31/06