Amdocs and Economist Intelligence Unit Report: Service Providers Adopt New Strategies to Address the Competitive Climate

NICE, France, May 18 /PRNewswire-FirstCall/ -- At Management World Nice 2010, Amdocs (NYSE: DOX), the leading provider of customer experience systems, today announced the results of a research report that examines a variety of business models service providers are pursuing when it comes to competing with "over-the-top" Internet players such as Google and Skype. The report concludes that service providers' unique assets, such as their existing relationships with customers and their ability to deploy services over multiple technology platforms, provide competitive advantage and better partnering opportunities with large Internet players.

"After talking to service providers around the world, the report found that the risk of service providers becoming a 'dumb pipe' is vastly overstated," said Denis McCauley of the Economist Intelligence Unit (EIU). "This report tells us that despite the many challenges the industry faces, forward-looking service providers are finding ways to generate new revenue via new business models. Service providers' strategies are being defined and validated, and are achieving results."

Entitled "Fighting Smart," the EIU report outlines five strategy options for service providers to consider as they capitalize on the emerging connected world in which it's predicted that more than a trillion devices will be connected to the network. The report concludes that these five strategies, even if adopted in isolation, can help service providers manage the challenges of the changing marketplace. Moreover if the strategies are pursued in combination, they can drive service providers' long-term profitability. The strategies are:

• Smart Pipe: Partnering, instead of competing with "over-the-top" players (Internet companies that deliver their own video and content over the service providers' networks), will enable service providers to deliver a compelling customer experience for their subscribers and attract new customers.  According to the report, a leading UK service provider has realized a 20 percent increase to its profit margin through partnering with an Internet company and attracting more profitable customers.
• Efficient Pipe: Greater automation of business processes will boost service providers' profitability.  Careful monitoring of competition and the demand for services will help service providers control the pace of expensive next-generation network deployment. Business process modernization, closer integration of fixed and mobile units, sharing of network components and using advanced technologies in high-demand areas can all help improve efficiency. Recent data suggests vast cost reductions from moving to new networks, including a 50 percent reduction in the cost-per-megabyte when moving from 3G to HSPA (high-speed packet access), and another 50 percent reduction in going from HSPA to LTE (long-term evolution).
• Pricing Pioneer: Adoption of new pricing models that better reflect actual network usage, such as pricing models based on time-of-day usage and speed, will safeguard profitability. The report notes that fair-usage policies that target "bandwidth hogs" may prove effective in some markets, and raises the opportunity of "traffic shaping" where service providers base tariffs on speed or charge more for usage during busy periods.  
• Defender of the Realm: Embracing rather than resisting competing technologies such as voice-over Internet Protocol (VoIP) will retain and attract customers, and generate more revenue from data services. Blocking VoIP, says the report, is a short-term approach, as it will likely meet with a customer backlash.
• Transformer: Expanding into industries such as energy and healthcare, using cloud computing, intelligent networks and machine-to-machine communications, will generate new revenue opportunities.

The EIU research was conducted in the spring of 2010, based on interviews with senior service provider executives and independent industry experts, as well as on desk research. Sponsored by Amdocs, the EIU bears sole responsibility for the content of the paper. The research report is available at www.eiu.com/sponsor/Amdocs/Operator_strategies.

About Amdocs

Amdocs is the market leader in customer experience systems innovation. The company combines business and operational support systems, service delivery platforms, proven services, and deep industry expertise to enable service providers and their customers to do more in the connected world. Amdocs' offerings help service providers explore new business models, differentiate through personalized customer experiences, and streamline operations. A global company with revenue of $2.86 billion in fiscal 2009, Amdocs has approximately 18,000 employees and serves customers in more than 60 countries worldwide. For more information, visit Amdocs at www.amdocs.com.

Amdocs' Forward-Looking Statement

This press release includes information that constitutes forward-looking statements made pursuant to the safe harbor provision of the Private Securities Litigation Reform Act of 1995, including statements about Amdocs' growth and business results in future quarters. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that our expectations will be obtained or that any deviations will not be material. Such statements involve risks and uncertainties that may cause future results to differ from those anticipated. These risks include, but are not limited to, the effects of general economic conditions, Amdocs' ability to grow in the business segments it serves, adverse effects of market competition, rapid technological shifts that may render the Company's products and services obsolete, potential loss of a major customer, our ability to develop long-term relationships with our customers, and risks associated with operating businesses in the international market. Amdocs may elect to update these forward-looking statements at some point in the future, however the Company specifically disclaims any obligation to do so. These and other risks are discussed at greater length in the Company's filings with the Securities and Exchange Commission, including in our Annual Report on Form 20-F for the fiscal year ended September 30, 2009, filed on December 7, 2009 and in our quarterly 6-K forms furnished on February 8 and May 13, 2010.  

SOURCE Amdocs