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ePower Systems
Market Research and Analysis

Overall Billing Market
The total recurring billing market in the US includes utilities, telecom firms, Internet service providers, cable television operators, credit cards and banks. As figure I illustrates, households receive approximately 6 to 17 bills per month, generating over 15 billion recurring bills a year in the US alone. Companies spend on average a $1.50 per bill to send out a traditional paper bill due to paper, printing, postage and processing costs. As the figure 2 illustrates, savings from EBPP can reach $1.90 per bill when all aspects of customer service, financing and billing costs are included.

Figure 1

Figure 2

Therefore, the potential for total savings is estimated to be between $15 billion to $28 billion annually depending on the type of the biller. Electronic Bill Presentment and Payment vendors, including ePower, will compete for a share of a market forecasted to reach $4 billion in the year 2000 and $19 billion in the year 2005.5

Total recurring billings are estimated to reach 67 billion worldwide by year-end 2000, including telephone, electricity, gas, water, CATV, and other utility services.

Utility Market
ePower's primary target market will be household utility firms. The utility industry is a major component of the overall billing market. This market represents 25% of the overall billing market.6

For much of the century utility businesses have been tightly regulated with structured cost plus prices and defined areas of service. However, deregulation is forcing these monopolies to compete for markets and customers. Competition results in lower margins, and firms are forced to focus on reducing costs, increasing revenues, and differentiation. As competition expands, consumers will have multiple choices in a commo4jty market. As utilities lose their monopoly, they will need to differentiate themselves through providing more services and convenience. Utility firms are trying to expand their product offering by providing services such as cable, telecom, and Internet access to their existing customer base in order to increase revenues.

ePower's CustomerDirect represents a solution to the three problems posed by utility deregulation: lower margins, emphasis on service, and promotion of new products. CustomerDirect provides value and convenience to the end customer, lowers the costs of the utility, and offers the capability of targeted customer marketing.

Factors influencing adoption of EBPP
The electronic bill presentment and payment industry is still in the embryonic stage.7 There exist several products and services in the initial stages of deployment, which capture in part, the benefits of EBPP. The company is identifying strategic geographic regions with in the United States that combine both growing population trends and high levels of computer usage. Urban centers such as Boston represent strong potential target areas due to high levels of computer usage and large population bases. Growth in Internet usage and the extension of the Internet to include financial transactions are important catalysts that will impact the growth of the EBPP industry.

Internet growth
Business applications on the Internet grow in tandem with the overall acceptance and usage of the network. Internet content is growing at 140% a year, which is driving people of all demographic segments to increase Internet usage. The explosive growth of the Internet has opened the doors for a shift in the billing industry, from paper-based billing to electronic bill presentment and payment. The following points summarize the increasing acceptance of the Internet.

Growth in financial transactions
The second key contributor to the growth of the EBPP industry is the growth of financial transactions done online. The following points summarize the increasing use of the Internet for financial transactions.8

Competitors in the EBPP industry
Although there are several companies targeting business-to-consumer EBPP services, the following vendors are ePower's main competitors.

Edocs/Checkfree - The edocs-checkfree alliance was created in November 1998. Checkfree intends to use edocs' BillDirect software in its billing system. Checkfree's strategy is to provide bill consolidation and payment services to large billers, consumers and financial institutions. This strategy requires critical mass, as Checkfree adds more billers to the fold it will increase the possibility that all of a customer's many bills are accessible through Checkfree.

Transpoint - This company is an alliance between Microsoft, First Data Corp, and Citibank and was created in September 1998. Transpoint's pilot projects have targeted financial institutions, multi-national corporations like Xerox and GE, cellular communications, and retail firms. Transpoint is following a very broad approach to signing on pilot customers.

BlueGill Technologies - Founded in 1996, BlueGill's 1to1 Server is a data stream parsing engine and translation tool. The product is designed to extract billing data from intelligent data streams, convert the billing data to one of several formats (XML, PDF, and ASCII), and store the information in a relational database.

Addressing the competition
ePower's focused approach will drive its success. The following are key points of differentiation, which provide advantages over competing models.

The market is still taking shape and each solution differs in its approach to delivering and storing billing information. Currently, ePower's CustomerDirect is the only solution that is designed specifically for the utility industry and presentment of bills via email as well as on the Internet. Moreover, ePower's focus on the utility market will enable the company to gain a dominant share as EBPP provider for the utility industry. First mover advantage is critical for EBPP providers-, the first mover can offer the customer all the benefits of applying technology to the bill presentment and payment process. Once a biller has signed on with ePower, the biller will reap the benefits of technology, and follow on competitors will be hard pressed to offer significant additional benefits.

5 Killen & Assoc.
6 Based on 3 utility bills/month/household, 103 Million households. US Census Bureau.
7 Nicole Vanderbilt. "Bills. Bills (Click), More Bills .... A Race Is On for Best Paperless-Payment System" Wall Street Journal. November 19, 1998.
8 Sources: Online surveys, Home Financial Network, Forrester Research, Killen & Associates
9 Ibid.

ePower Systems
Table of ContentsAppendices
1. Executive Summary
2. The Industry
3. Company Description
4. ePower's Services
5. Market Research
6. Marketing Strategies
7. Management
8. Financial Plan
Technology
Monthly Financials
Quarterly Financials
Annual Financials
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