Venture funding for service provider companies on the upswing

After a relative drought, there has been a flurry of venture funding for companies related to service providers and the equipment they buy.

VocalData recently announced a new round of venture funding that will be put toward helping the company better meet the needs of carriers using its software to expand their hosted IP telephony rollouts. (https://www.nwfusion.com/edge/news/2003/0716funding.html)

Optical access gear maker Flexlight Networks landed $17 million from St. Paul Venture Capital, Accel Partners and Applied Materials. U.K.’s Native Networks pulled in $11.5 million to further its development of metro Ethernet equipment for service providers. The lead investors are Infinity and JVP. Other existing investors taking part in the round were Alta Berkeley Venture Partners, Anschutz Investment Company, Apax Partners, Delta Capital Investments, Israel Seed Partners, SkyPoint Capital Corporation, and Soros Private Equity Partners. And Fiberlink Communications won $50 million in funding for its secure Internet services from Technology Crossover Ventures.

VocalData is focused on software that supports IP telephony services, particularly network-based IP Centrex-like services. These services are pretty much the domain of smaller carriers, but if they are accepted by end users, will become part of the offerings from larger service providers such as the regional Bell companies.

Flexlight is focused on passive optical network equipment, which may become a hot area over the next two years  given that three of the major local carries in the U.S. are seeking proposals to support PON in their networks. This technology connects carrier networks with customer sites via branching fiber networks that requires no electronics between carrier switching offices and customer sites. BellSouth, Verizon and SBC regard the technology as a way to support the combination of voice, video and data services.

Native Networks provides broadband access to corporate sites within metropolitan networks by blending Ethernet traffic onto existing metro fiber networks. Because the service offered by Native Networks can be added without ripping out existing network gear, it is potentially interesting to existing broadband metro carriers that want to offer such services as virtual LANs.

FiberLink says it will use the investment for a variety of efforts including buying back some of its preferred stock to consolidate ownership of the privately held company. It says it also plans to invest in new technologies via licensing, joint ventures or acquisitions.

These investments represent a smattering of service providers and their equipment vendors, but indicate a belief that the use of some of the major new network technologies will grow as the economy improves.