Virtela wins new round of funding

VPN service provider Virtela has signed up Extreme Networks as a customer, providing a 560-site network that spans five continents. While this is an impressive rollout for any carrier, the nature of the Virtela’s network makes it noteworthy.

VPN service provider Virtela has signed up Extreme Networks as a customer, providing a 560-site network that spans five continents. While this is an impressive rollout for any carrier, the nature of the Virtela’s network makes it noteworthy.

The company leases IP backbone capacity rather than building its own network. As a result, the company says it can provide services at half the cost of a provider that builds and runs its own plant.

By connecting each of its points of presence to at least two and as many as five carrier backbones, Virtela always has multiple network backbones to choose from. If one carrier suffers a catastrophic outage, customers can be switched to another backbone provider. So customers get redundancy without having to deal with more than one provider.

The company has been in business for about two years based on the premise that wholesale backbone bandwidth is so plentiful that performance over these networks as measured by delay, packet loss and jitter is so good that Virtela itself can offer service-level agreements (SLA) to its customers. At any given time, one of its backbone provider’s networks will be good enough to meet the SLAs.

So far this has borne out to be true. The company boasts that performance of its IP services rivals the performance of a frame relay network at rival prices. The company’s chairman says the backbone capacity Virtela buys is holding its own for performance, and in certain Asia-Pacific countries including China and Malaysia, performance has actually improved.

Virtela’s service is fully managed, meaning customers don’t have to worry about connecting to the network except to make a router port available at each site. Virtela also supplies the local loop connection to its nearest POP, and can perform this service in 20 countries.

The company has just won a new round of funding in the amount of $11 million, bringing total funding to $86 million, which it says is enough to keep it running until it is profitable. Perhaps this new model of doing business is the right one for the tough economy.