RealTime IT News

Bucks for Backhauling

FiberTower, which specializes in backhaul networks for wireless carriers, has raised $150 million in fourth-round financing to expand into new markets in 2006.

It's believed to be the second-largest technology-related venture capital investment of the year, trailing only VoIP giant Vonage's $200 million windfall in May.

Crown Capital International was lead investor, contributing $55 million to bring its ownership stake to 32 percent. Oak Investment Partners, Tudor Investment Corp., Goldman, Sachs & Co. and Meritech Capital Partners also participated.

"[The investment] reflects our belief that there will be a significant demand for the backhaul solutions FiberTower provides to wireless carriers as the demand for additional wireless minutes of use increases," Crown Capital said in a statement.

Wireless carriers have traditionally used copper T1 circuits to connect cell sites to their backbones. But copper isn't well-suited for today's networks and is susceptible to outages and scaling problems, FiberTower said.

The backhaul problem becomes more acute as the number of mobile minutes rises and network operators rollout new third-generation systems that carry voice data and video.

FiberTower uses a combination of fiber and Digital Radio Links (DRLs) to help carriers improve backhaul efficiency and performance.

Since its founding in 2000, San Francisco-based FiberTower has now raised $225 million, Ian Brady, a company spokesman, told internetnews.com. Brady added that this most recent round should carry the company through to profitability, though he declined to say when that would be.

The five-year-old privately held company began deployments with wireless carriers in 2002 and is now in nine U.S. markets. It works with some of the nation's largest wireless carriers.

Advocates of WiMAX have said that the emerging wireless broadband technology may be able to provide backhaul for wireless network traffic. A number of carriers testing WiMAX, but it's still unclear exactly what role it will play in their infrastructure.