Openet 'Surprised' by Amdocs Legal Action

CEO of Irish policy control vendor says Amdocs legal action came out of the blue, and could delay stock market listing

September 13, 2010

4 Min Read
Openet 'Surprised' by Amdocs Legal Action

The CEO of Irish policy control and charging technology specialist Openet Telecom Ltd. says he was "surprised" by the legal action initiated by Service Provider Information Technology (SPIT) giant Amdocs Ltd. (NYSE: DOX) and that the move, if not resolved swiftly, could impede his company's plans for an IPO. (See Amdocs Sues Openet.)

Speaking with Light Reading in London, Niall Norton says the news that Amdocs had filed a lawsuit against Openet for patent infringement "was a complete surprise, and I'm surprised it's still happening. The fact that there seems to be an issue is a surprise, and the timing is a big surprise.

"We're not intimidated, but any case of this nature is going to be distracting. There's no good news in this for us," says surprised Norton, though he adds that "no one has lost confidence in Openet, either internally or externally."

Amdocs, he says, "is a good company and a ferocious competitor. It's good to know they're thinking about us as much as we're thinking about them."

Norton adds that the two companies are set to meet to discuss Amdocs' claims, which, he says, relate to technology Amdocs acquired when it bought mediation software firm Xacct in 2003. (See Amdocs Buys Xacct (At Last).)

"We're open-minded about what might happen next. Our lawyers say this could take anything between three and 12 months to sort out," adds Norton.

So will this affect Openet's plans to list its stock? The company told Light Reading earlier this year that it was preparing for an IPO, and Norton says that, despite the economic downturn, the company has been growing quickly and is on course to exceed revenues of US$100 million this year. (See SPIT Watch: iPad, IPO & M&A.)

The CEO says the plan all along has been to be "IPO-ready by mid-2011. This situation is in the background, and we're sticking with our time frame. Realistically, though, we would need to get this out of the way before we file any S-1s with the SEC."

Openet's investors, then, will be hoping for a quick resolution to the Amdocs action if they're looking for an IPO-based payback next year -- though, of course, an IPO is not the only exit strategy for the company's backers. (See Openet: No M&A Talks Underway.)

As for business in general, Norton says the growth in mobile data service usage around the world, and the migration towards Long Term Evolution (LTE) architectures in some markets, is fueling increasing demand for support systems that can deliver integrated policy control, charging, and balance management, which, says Norton, is Openet's sweet spot.

In addition, he says the market in "Asia/Pacific has come alive in the past 12 months, Malaysia and Indonesia in particular, with huge volumes of GPRS and 3G traffic. The appetite for data is enormous, and users are being very innovative with smartphones."

Looking ahead, he says Openet is working with some partners around cloud computing developments. "I expect cloud services to change the market in the same way that the Internet, then smartphones, and then the combination of the Internet and smartphones, have done."

Separately, he says Openet has been doing a lot of R&D work with Cisco Systems Inc. (Nasdaq: CSCO) and with IBM Corp. (NYSE: IBM) -- "We're good at being a 500- to 600-person company that can collaborate with others, rather than being a do-it-all company" -- so it's not a massive leap of faith to believe that these are two of the companies Norton and his team have been talking to about the cloud.

The other hot area of development is the development of policy control capabilities to support mobile data offloading and onloading -- dealing with RAN congestion, basically. (See Openet Tackles RAN Congestion.)

"RAN congestion will be the new buzz phrase in Barcelona next February," predicts Norton, looking ahead to the next Mobile World Congress (MWC), though it should be noted that at least one of Openet's policy control rivals, Bridgewater, was plugging a RAN congestion solution at this year's MWC. (See Sycamore Intros Bandwidth Manager and MWC 2010: New Product Recap.)

— Ray Le Maistre, International Managing Editor, Light Reading

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