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Commcare, a Swiss telecommunications service upstart, is undercutting rivals by 50 per cent or more with its new flat-rate voice services. By chucking out the billing system and using Voice-over-IP, the company can cut costs far below Swisscom, Diax or Sunrise, the three dominant players in the Swiss voice market. While working up the business plan, Commcare discovered that billing-related costs accounts more than 60 per cent of the cost of providing telephony services is due to (Swisscom AG attributed 70 per cent of the monthly phone charge to billing systems and support in a recent report to the Securities Exchange Commission in the US, where its shares are traded.) So Commcare decided to bypass an expensive billing system. Instead, it collects the fixed rate up front for three months. The company takes a risk that its customers will not radically change their calling patterns from month to month. The contracts are renewable every three months, which reduces the risk for both customer and service provider Account executives at Commcare can view traffic and usage from any Web browser. Commcare's underlying technology is Voice-over-IP. For customers willing to switch to IP based telephony equipment, Commcare can offer an even better discount. For customers that want to use existing telecoms equipment, Commcare can still meet their voice needs at a flat rate by using the pre-select service model with a twist. The startup is in the right market space, targeting SMEs. Worldwide, data revenues from SME are expected to rise from US$8 billion in 2000 to US$19 billion by 2005, while the corporate market will remain relatively static, increasing from US$18 billion to $22 billion over the same period, according to the UK-based Analysys. Driving the growth is the uptake of new Internet Protocol (IP) technologies.

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