Prepaid Services are P-Cube's Big Ticket

Today, P-Cube announces a major partnership with one of the trendiest, fastest growing equipment makers in the world.

by Alex Goldman ISP-Planet Associate Editor [January 20, 2004]

One of the trendiest tech companies at the moment is UTStarcom of China, which has is frequently in the news. The company, with projected revenues for 2004 of over $2.5 billion, is one of the beneficiaries of the rapid growth of the Internet in China, supplying equipment first to large telcos in Asia, and more recently to telco customers around the world.

Last year, the company entered the cellular market by acquiring Commworks, a former subsidiary of 3Com. Commworks serves mobile operators using the U.S. CDMA standard by providing Packet Data Serving Nodes (PDSNs) which connect mobile data customers to wired backbones and can provide additional intelligence, much like a DSLAM or CMTS. The Commworks PSDN product is called Total Control.

One analyst recently noted, "Kaufman Brothers anticipates additional revenue growth opportunities for the company in the CDMA PDSN and professional services segments in the forthcoming years, boosted by its CommWorks acquisition in May 2003."

Sunnyvale, Calif.-based P-Cube is today announcing that P-Cube and UTStarcom have formed an alliance to deliver P-Cube's billing system for mobile operators, Encharge, to UTStarcom customers. "P-Cube brings immense value to UTStarcom because its solution allows UTStarcom to introduce new capabilities for its PDSN infrastructure to customers, allowing them to address new market segments and offer new services," says Vikash Varma, P-Cube president of worldwide sales & field operations.

"From our perspective, we get access to a very significant install base and carrier class customers whose preference is to deal with equipment providers," he adds.

In any deal between a large company and a small one, observers tend to assume that the smaller company has made significant concessions on price. Although Varma admits that the P-Cube product is priced competitively, he says the PDSN market is a good one.

"The reality is that these solutions are viewed as providing real ROI. This is not just cost control. Service providers are opening new revenue streams with this product, and addressing a new market base."

The P-Cube billing product, Encharge, enables service providers to do the complex billing that data networks require to provide prepaid services. Service providers have been providing prepaid voice service for a long time.

Prepaid services are compelling for several reasons. Operators collect money up front and do not need to run a credit check on the customer. This is especially significant in developing markets where even good customers have no credit history.

Customers like prepaid services because they have a built-in maximum charge and because they require no contract. Customers who wish to use the service only rarely, perhaps as an emergency phone, can buy a prepaid service and avoid a monthly fee.

The bottom line for operators is that offering prepaid service increases the number of potential customers they can serve. This is particularly important in mature markets.

Varma says that voice operators are only beginning to learn how complex the data world can be. "In data, services aren't just on or off. In voice, you only have to decide whether to allow a call to go through or not. If there's not enough money for the call, you can transfer it to IVR or to a live customer representative who asks for more money."

In data, on the other hand, some services are free, others are paid. A customer may need to be advised of a charge for using a service or be asked to authorize a charge. The charge may depend on content type, with weather and news being free, but stock reports and sports scores costing money. Premium services could be built around protocols like SIP, RTSP (for streaming media), WAP, and HTTP. Premium services could also involve special applications like Push to Talk (PTT).

The ability to distinguish between applications is what P-Cube brings to the table. Explains Varma, "P-Cube's ability to do deep packet inspection and determine the nature of the appication in question is a nice fit for this added functionality. We enable real-time decisions. It made sense to us, after our success in the traffic control market, to pursue this area, which has similar technical requirements. You have to look at all of the traffic and do a quick credit check against a quota on a per-subscriber basis."

As cellular and Wi-Fi networks converge, this equipment market will surely get even more interesting, and the nodes will require even more of the intelligence that software products like P-Cube's deliver.

— End