Amdocs Defects Slow Billing Rollout, Clearwire Says

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Defects in Amdocs software code will push back the introduction of a new customer care and billing system at Clearwire until next year, the wireless broadband provider said in a regulatory filing.

Until the new system can be implemented, Clearwire will have to rely on its existing platform, the company disclosed last week in a filing to the U.S. Securities and Exchange Commission (SEC). The Form 10-Q filed Thursday contained information related to Clearwire's second-quarter financial results, which were reported on Wednesday.

Clearwire has two networks: an older, proprietary wireless broadband system and the WiMax network it is building now. Customer care and billing have been sore points for some customers as Clearwire introduces WiMax in new markets, as well as in ones where it already has subscribers and wants to convert them to the new technology. On messages boards and at state consumer agencies, some customers have reported difficulty in getting useful technical help or in canceling the service.

Such problems haven't kept Clearwire from generating significant subscriber growth. For the second quarter, it reported a net gain of 127,000 subscribers to its own branded service, reaching 940,000 by June 30. However, the "churn," or turnover rate for that service, was 3.2 percent in the second quarter, up from 2.8 percent a year earlier.

Clearwire will now be using its current software at least into next year as a result of problems implementing the Amdocs platform, the company said.

"The development of our new Amdocs customer care and billing systems has encountered unanticipated delays resulting primarily from the discovery of defects in the new Amdocs software code," Clearwire told the SEC. "Due to these delays, the implementation of the new systems has been delayed and will continue into 2011, and the delays have resulted in additional, unplanned costs to the company."

If the new system can't be implemented, it may affect Clearwire's ability to provide timely and accurate billing and to provide "quality customer care," the company said.

Clearwire has made a major commitment to Amdocs, which is one of the main suppliers of billing systems to mobile operators. Under a seven-year deal with the software and services company, Clearwire wrote, it is required to pay Amdocs licensing, implementation and subscriber fees and reimbursable expenses. It spent US$47.7 million on the platform just in the first six months of this year, during the application development stage of the project. In the first six months of the year, Clearwire posted a loss of about $220 million on revenue of just over $229 million. The company's total capital expenditures were nearly $1.4 billion, primarily for building out its WiMax network.

The kinds of delays and problems Clearwire described are not uncommon with customer care and billing software, according to Altimeter Group analyst Ray Wang.

"This is probably one of the most complicated types of software there is," Wang said. In addition to adding up the customer's bill, it needs to take into account any applicable discounts, promotions, regulatory requirements and taxes, as well as what services a customer is eligible to sign up for in the first place. In addition, large companies usually want a highly customized version of the platform, he said. Spending nearly $50 million over six months on development is par for the course at a large customer, he said.

Wang said he wasn't aware of other big complaints about Amdocs code recently and suggested the full story may be complex. In addition to vendors writing faulty software, customers sometimes change their requirements or don't explain them clearly, and system integrators may overstate what they can accomplish. Amdocs typically acts as its own integrator, he noted.

"On complicated projects like that, there's a lot of blame to go around," Wang said.

Clearwire and Amdocs were not immediately available for comment.

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