Subject: [NEXTEL-1] Telecom's Downturn Spurs Another Sector Firms Focus on Auditing Carriers' Bills

From: Marcel <[email-masked]>
Date: Thu, 20 Feb 2003 02:39:04 -0500

Telecom's Downturn Spurs Another Sector  Firms Focus on Auditing Carriers' Bills

By Yuki Noguchi
Washington Post Staff Writer
Wednesday, February 19, 2003; Page E05

Vibrant Solutions Inc.'s software checks as many as 5 billion records per day to make sure
its telecommunications carrier clients don't get overcharged on their bills.

That means tracking, among other things, the location, duration and rated price of every
bit of data transmitted over the client's network.

The benefit? In some cases, a carrier can recover up to 8 percent in overpayments it never
realized it made.

Money is tight these days in the telecommunications industry. Carriers spent and lost
billions of dollars building networks in recent years; too many carriers built too much
capacity, pushing prices down and driving many of the firms out of business. The survivors
are now forced to watch their pennies, and some are finding spare change in mistakes in
their billing systems.

"The drive here is to discover revenue leakage areas, which is significant in the
telecommunications industry," said Verne Anton, an analyst with the Gartner Group, a
market research firm. "The market is such that it is looking for these things now. This is
found money."

Long-distance carriers and competitive local carriers typically spend 40 to 60 percent of
their revenue paying other carriers to handle their phone calls, and, on average, 3 to 8
percent of the charges are wrong, said Rich LaPerch, chief executive of Vibrant.

Auditing billing systems is immensely complex because a communications system is made up
of hundreds of companies whose wireless, long-distance, local and Internet networks
crisscross, ferrying one another's e-mails and calls. There are more than 200 categories
of fees, taxes, tariffs and service fees that carriers charge for carrying each other's
traffic. So over the course of a month, a carrier's bill for calls and Internet usage
takes up reams of paper.

But the market for these services is full of competitors. Some companies develop and
manage their own bill-checking systems. Consulting firms such as PricewaterhouseCoopers
LLP and BearingPoint Inc. install software for many carriers. Then there are companies
like Connexn Technologies Inc. and Fairfax-based Vibrant that make the software that
audits the bills.

Despite competition, Vibrant said its revenue increased 23 percent last year, and 72
percent the year before -- two years in which it also lost customers to bankruptcy.

On the other hand, cash-strapped companies are also a good audience, LaPerch said. "We
have never failed to find customers money."

Vibrant formed two and a half years ago, as the result of the merger of four private
companies, two of which were Telecon LLC from Fairfax and Longitude Systems Inc. of
Chantilly. It is funded by venture investors, including Alexandria-based Columbia Capital
LLC, Grotech Capital Group of Timonium and Bessemer Venture Partners in Wellesley Hills,
Mass. Vibrant has gotten $37.5 million in two rounds of funding; it more than 30 customers
and 140 employees.

Vibrant gets paid only when it recovers money for a client -- a practice that analysts say
makes it an easier sell. Last year, Vibrant developed software that similarly audits the
incoming money -- "revenue assurance," they call it -- finding typos and glitches in
administrative systems that prevent companies from collecting from customers.

"As much as 3 percent of revenue could be left, literally, on the floor," LaPerch said.

Reston-based Nextel Communications Inc. saved a "significant" amount since it started
using Vibrant's billing auditing software four years ago, said Audrey Schaefer, a
spokeswoman for the wireless company. She declined to elaborate on the savings. "It is
extremely important to Nextel to make sure we pay for only what we should pay for."

Technology that recaptures money "is one of the hottest sectors, in terms of software,"
said Jason Briggs, a software analyst with the Yankee Group, an industry research firm.
Vibrant already faces stiff competition from many others that offer billing audits, so its
challenge will be landing customers for its new revenue assurance software, he said. "It's
a space everyone's looking at right now."

http://www.washingtonpost.com/wp-dyn/articles/A27338-2003Feb18.html
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