Ellacoya’s $52M Tops Telecom News

Ellacoya Networks Inc., a Merrimack, N.H., startup aiming to help telecom carriers make cash from high-bandwidth data networks by letting them target services at specific customers, has received a second round of venture funding totaling $52 million.

The news led a quartet of announcements today from Boston-area startups making telecom infrastructure products.

AstralPoint Communications Inc. of Chelmsford, Mass., expanded its product line of infrastructure for metropolitan-area
networks; Enterasys Networks of Rochester, N.H., unveiled a new line of high-bandwidth switches for customers linking large groups of employees.

Ellacoya’s venture round was led by New York investment bankers Goldman, Sachs & Co. (NYSE:GS), with existing investors Lightspeed Venture Partners, Bessemer Venture Partners, Centennial Ventures and Lighthouse Capital Partners also contributing.

Those four were among the backers in Ellacoya’s $34 million first round in May.

Ellacoya is designing a hardware and software switching system to help telecom operators simplify their network systems and target deliveries of broadband services. For example, a telecom carrier could more easily carry streaming video or teleconferences to specific corporate customers, providing carriers with rich new revenue opportunities.

“Ellacoya is enabling powerful new business models for service providers,” said Joe DiSabato of Goldman Sachs. “We believe this service network harnesses the power of the optical build-out and opens an opportunity in the service provider equipment arena.”

Ellacoya said it would use the cash to continue development of its switching system, as well as for marketing and sales.

Founder and president Kurt Dobbins said, “The optical build-out has generated demand for high bandwidth content and predicated a new service model where personalized content and applications must seamlessly, and automatically, be delivered via simple point-and-click interfaces. We are well-positioned to advance this vision.”

In other news:

  • Astral Point, which is backed by $113 million in venture funding and has sold $100 million worth of equipment to Time Warner Telecom, said its new product line would allow network operators to buy metro-network gear at significantly lower costs.

    Metropolitan networks connect urban telecom infrastructure to larger telephone and Internet backbone systems. More data traffic today is carried purely within metro networks, leading to greater demand for improved infrastructure.

    The company’s new device, ON2000, is smaller and costs about half as much as its standard ON5000 product line ($15,00-$100,000 as opposed to $30,000-$175,000). The new product combines the ability to aggregate digital subscriber line traffic, deliver Ethernet services and carry up to 4,000 phone lines or 168 high-data T-1 lines.

    Founder and CEO Raj Shanmugaraj said, “Astral Point is the first vendor to address the fundamental shift within the metropolitan network and the first to deliver a highly tuned solution. With today’s announcement, we’ve taken the lead in serving this new market.”

  • Octave signed a contract committing British Telecom over two years to buy $20 million of its OCI 1000 conferencing systems.

    BT in September launched an online phone conference service that needs no prior booking or reservations. Octave’s gear can allow BT to set up voice confernces without

    outside operators.

    Octave founder and chairman Rob Scott said, “This is a confirmation of our capability to service any size client, from a local business to a global service provider.”

  • Enterasys Networks unveiled the first of a new line of switches designed to handle data traffic within corporate workgroups.

    The Dell’Oro Group says the market to handle teleconferences, streaming and other traffic among the workstations and intranets of large businesses will grow to $3.9 billion by next year.

    Enterasys said the first product of its Vertical Horizon line, the 4802, can handle streaming voice and video along fiber, copper or long-wave connections. It comes with 48 ports for Ethernet connections and costs $4,000.

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