Light Reading
Access equipment maker hauls in a big funding round so it can chase even bigger customers

Entrisphere Scores $75M Round

Light Reading
News Analysis
Light Reading
5/9/2005
50%
50%

In the race to drive profitable carrier services down last-mile access networks, Entrisphere Inc. has just topped off its tank with a whopping $75 million Series C financing round, its third in five years (see Entrisphere Closes $75M Round).

"We're going after the top tier of customers here… and this is an appropriate sized round for that," explains Don McCullough, Entrisphere's VP of marketing.

Entrisphere, which makes a multiservice broadband access loop carrier platform device thingy (MBALCPDT) called the BLM 1500, is in the business of delivering voice, video, and data services down last-mile pipes (a.k.a. first-mile pipes), and it doesn't matter if the carrier's access network is made of old copper, new fiber, or some combination of the two. In a 7-foot telco rack, three BLM 1500s can support up to 4,032 POTS lines, or 2,016 ADSL2+ lines, or 672 Ethernet lines (see Entrisphere Launches Flagship Device).

The vendor is most often compared with Calix Networks Inc. in terms of device functionalty. But while Calix is targeting smaller carriers and working its way up to customers such as Sprint Corp. (NYSE: FON), Entrisphere is aiming straight for the top, targeting only the largest 20 or 30 telecom carriers or cable networks in North America (see Calix, Entrisphere Sprint Forward).

That strategy sounds a bit nutty, given that the biggest carriers -- the ones with the most spending dollars and the largest access networks -- have already declared their equipment vendor choices for their next-generation access networks, and Entrisphere didn't make the cut. (See Alcatel, Redback Score at BellSouth, Moto Gets a Piece of Verizon FTTP, and Mais Alors! Alcatel Bags $1.7B SBC Deal .)

But the vendor's CEO, Mark Floyd, says that with all the permutations possible in a triple-play last-mile network, "the game isn't over just because something was announced in the press.

"There will be second sources to all of those vendors that have been announced," he says, adding that "not one access architecture will hit 100 percent of the users in any network."

With that "it ain't over 'til it's over" strategy guiding its big carrier sales, Entrisphere has continued to sock away cash, having raised $171 million to date. Its latest round was led by VantagePoint Venture Partners, with participation from Entrisphere's entire exisiting investor group (see Entrisphere Nabs Siemens Exec).

Floyd says the money will to go expand customer support, manufacturing operations, product development, and other functions, but he's not hiring everyone all at once. "Right now, we're staffed at the appropriate levels," he explains.

The company is so convinced it can help big carriers make a difference, it has even entered the frighteningly low-margin optical network terminal (ONT) market -- the same equipment area that gave Tellabs such fits that it had to go buy a startup just to keep its technology up to date (see Tellabs Vacuums Up Vinci).

Floyd, for one, has been down this road before. He led Efficient Networks in the DSL modem business -- another overcrowded, low margin equipment area -- against some big competitors (Alcatel) in some big accounts (SBC). (See A New Boss for Siemens ICN).

Additionally, Entrisphere says it has some tricks that may help it move in where other ONTs have faltered.

"We think we have some good ideas for how to improve ONTs," says marketing chief McCullough. Those include allowing for longer cable runs between the power supply and the ONT itself, and enabling the ONT's electronics to be removable from the ONT housing -- a carrier perk for households that move, change service, or just don't want to use the advanced services within their reach.

Entrisphere's point, as McCullough explains, is that it makes sense for carriers building fiber connections to homes to have the option of using a device that can deliver up to 100 Mbit/s of bandwidth. He says carriers delivering IPTV with HDTV channels will need "something north of 25 Mbit/s per home". But later, evolving data and video services will translate to a bigger bandwidth need.

The ONT business, like all of Entrisphere's work, may take some time to catch on. "We won't be profitable with the first units," McCullough says, "but we expect it to be an attractive business long-term."

Likewise, chasing the world's largest equipment vendors in the access market isn't for the faint of heart -- nor is the startup looking for a quick and easy shot at liquidity. "I don't think we would have raised this type of money if we weren't serious about being a long-term player in this industry," says Floyd.

Entrisphere, which just made its product public last year, has announced two customers and has reportedly been linked to a major access RFP at Sprint, where Lucent Technologies Inc. (NYSE: LU) is serving as its supply partner. Competitor Calix, while going after smaller accounts, has more than 150 service provider customers and is booking revenues at a rate of more than $100 million a year.

Separately, today, Entrisphere announced it has added Cynthia Ringo to its board of directors. Ringo, who served as CEO of CopperCom, and, briefly, Pluris, is now a managing director of Vantage Point Venture Partners.

— Phil Harvey, News Editor, Light Reading

(4)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
firstmile
50%
50%
firstmile,
User Rank: Light Sabre
12/5/2012 | 3:15:57 AM
re: Entrisphere Scores $75M Round
75M Series C...
Calix is getting the small customers...
Alcatel is getting the big customers...
But we are hoping to get some scraps...and at very low margins...
yikes!!!!

Who are there current customers and how much revenue are they currently doing?
...first
007engineer
50%
50%
007engineer,
User Rank: Light Beer
12/5/2012 | 3:15:52 AM
re: Entrisphere Scores $75M Round
IMHO, these VCs are thinking straight - they got a good product, there is a market need, great engineering team. Give them a push over the last mile and they could win this race...

Or may be the VCs know that someone is going buy them out soon(CSCO, LU, ALA), or they got some other tricks up their sleeves they haven't announced yet (another use for their hw). Don't count philw out at any time - he is as good as they come.

It is not 1999 - and when VCs write such a big check, you can bet they know something we don't :)

...and no, I don't work there.
-007engineer.

dodo
50%
50%
dodo,
User Rank: Light Beer
12/5/2012 | 3:15:50 AM
re: Entrisphere Scores $75M Round
"It is not 1999 - and when VCs write such a big check, you can bet they know something we don't :)"

I will bet that they still don't know. I tend to agree with the original poster. The giveaway of money has shifted from Optical to access. Everyone and his brother are vying for this segment but it ain't going to be easy for a start-up that can't grab the interest and wallet of the major carriers-whose MO is to go with a company which has already proved itself.

canttakemore
50%
50%
canttakemore,
User Rank: Light Beer
12/5/2012 | 3:15:39 AM
re: Entrisphere Scores $75M Round

it does not matter who is thinking what. But what are the employees thinking? In this era, with 175mil of funding, how much company does an engineer own. 0.1%, 0.05% .....

Engineers, you can do your calculations. if the company goes for 500 mill, how much you will make. What if it goes for less. After 5 years of hard work do you see the end. Or is it going to be another 5 in the boiler room.

Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Interviews
The New Wave of IP + Optical Integration

11|21|14   |   04:29   |   (7) comments


At the Alcatel-Lucent Technology Symposium, Heavy Reading senior analyst Sterling Perrin talks about how SDN has reshaped the discussion around packet and optical integration.
LRTV Huawei Video Resource Center
Huawei Highlights at BBWF 2014

11|20|14   |   3:40   |   (1) comment


Broadband World Forum is one of the world's largest telecoms, media and technology events with over 7,800 senior executives from across the globe converging on Amsterdam every year to identify the Next Big Thing. BBWF is an exciting place to meet the entire industry under one roof and identify the latest in network innovation, service optimization and customer ...
LRTV Huawei Video Resource Center
How Will BCMS Stimulate Margin for Broadband Operators?

11|19|14   |   6:52   |   (0) comments


In BBWF 2014, Liu Shuqing emphasizes the value of FMC 2.0 based full service experience by throwing light on the BCMS solution. The underlying principle of this innovative technique is to create network robustness and driving network from connection oriented to ACE – BAND oriented infrastructure, in which applications, cloud, and user experiences will be an asset ...
LRTV Huawei Video Resource Center
SingleFAN3.0: Better Connected Experience

11|19|14   |   3:06   |   (1) comment


At the BBWF 2014, David Hu, the VP of Huawei Access Network Product Line, talked about the future of access networks – SingleFAN3.0: faster broadband, wider coverage, and smarter connection.
LRTV Interviews
Basil Alwan Interview: The Road to Cloud

11|19|14   |   09:09   |   (0) comments


Alcatel-Lucent's head of IP and Transport talks about the migration towards a web-like networking environment, the impact of the cloud, SDN and NFV, and the yet-to-be-announced FP4 chip.
LRTV Documentaries
FairPoint Makes a Fair Point About Analytics

11|19|14   |   1:56   |   (1) comment


The US-based communication service provider gets to grips with advanced analytics, tackling data and breaking down the silos within its own business.
LRTV Documentaries
Analytics Lets C Spire Get to Know Subs

11|19|14   |   3:01   |   (2) comments


It's all about the data for US operator C Spire as it uses analytics to personalize its customer service down to individual subscribers.
LRTV Interviews
Nuage Branches Out With SDN: CEO Interview

11|17|14   |   9:32   |   (0) comments


Sunil Khandekar, CEO of Alcatel-Lucent's SDN-focused unit Nuage Networks, talks about the opportunities and challenges of breaking out of the data center into wide-area networks.
Light Reedy
Telecom Analytics Grows Up

11|14|14   |   1:15   |   (4) comments


The big data analytics debate has moved on from a year ago, with some experts suggesting it's no longer a technology challenge.
LRTV Huawei Video Resource Center
Huawei Compass

11|14|14   |   3:17   |   (1) comment


At OpenStack Summit 2014, Shuo Yang, Huawei Principal Cloud Infrastructure Architect introduced Huawei Compass, the software tool for solving customers' problems on the journey of OpenStack Cloud.
LRTV Huawei Video Resource Center
Huawei's Cloud Strategy in European Region

11|14|14   |   2:56   |   (1) comment


At OpenStack Summit 2014, Dr. Gotz, CTO of Huawei IT in European Region introduced Huawei's cloud strategy in European region.
LRTV Huawei Video Resource Center
Huawei's Contribution on OpenStack

11|14|14   |   5:58   |   (0) comments


At OpenStack Summit 2014, Dennis Gu, Huawei Chief Architect of Cloud Computing introduced the relationship between OpenStack and cloud computing, and Huawei's contribution on OpenStack.
Upcoming Live Events
December 2, 2014, New York City
December 3, 2014, New York City
December 8-10, 2014, Reykjavik, Iceland
February 12, 2015, Atlanta, GA
April 14, 2015, New York City, NY
May 6, 2015, McCormick Convention Center, Chicago, IL
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
Irish Telecom outlines the rise of VoIP technology, including its adoption within businesses and their perception of its quality.
Hot Topics
Bell Labs Chief Slams 'Toy' Networks
Robert Clark, 11/19/2014
$38.3M: Ain't That a Kik in the SMS
Sarah Reedy, Senior Editor, 11/20/2014
Do You Have a 2020 Vision?
Dennis Mendyk, Vice President of Research, Heavy Reading, 11/21/2014
Google, AT&T, BT Unite on Network Data Models
Carol Wilson, Editor-at-large, 11/20/2014
The New Wave of IP + Optical Integration
Ray Le Maistre, Editor-in-chief, 11/21/2014
Like Us on Facebook
Twitter Feed