Light Reading

Entrisphere Scores $75M Round

Light Reading
News Analysis
Light Reading

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        ADD A COMMENT
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...

Who are there current customers and how much revenue are they currently doing?
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.

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.

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.

From The Founder
The comms industry is rallying to the cause of open, independent interoperability testing.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Interviews
Top Tips for FTTH Operators

10|8|15   |   02:26   |   (0) comments

At Gigabit Europe 2015, Ventura Team co-founder Richard Jones talks about some of the key business case considerations for FTTH network operators.
LRTV Interviews
M-net Calls for FTTx Unity

10|8|15   |   03:45   |   (0) comments

At the Gigabit Europe event, Jörn Schoof from M-net, the Munich city network operator, calls for industry collaboration on fiber broadband access rollouts.
LRTV Documentaries
The Business Case Challenge for NFV

10|7|15   |   03:47   |   (0) comments

Virtual CPE is one of the early success stories for network functions virtualization, as service providers are finding flexible, programmable CPE solves a lot of logistics problems and reduces their cost. But even here, Masergy Communications faced a business case challenge, says CTO Tim Naramore.
LRTV Interviews
JT Offers Some Gigabit Lessons

10|7|15   |   4:08   |   (1) comment

Barna Kutvolgyi, managing director, Global Consumer, at JT, the incumbent operator on the island of Jersey, talks about how other service providers can learn from his company's gigabit broadband rollout experiences.
LRTV Interviews
AT&T's Chiosi on the Potential of Open Source

10|6|15   |   06:27   |   (0) comments

AT&T Distinguished Network Architect Margaret T. Chiosi talks to Light Reading's Carol Wilson about the potential for open source technology to liberate communications service providers.
LRTV Interviews
Network Security in a Gigabit World

10|6|15   |   05:52   |   (0) comments

Masergy's James Harrison talks about some of the network security and data center issues network operators need to consider as they expand their broadband services portfolios.
LRTV Documentaries
Telefónica: In Search of Virtual Simplicity

10|5|15   |   07:30   |   (0) comments

Francisco-Javier Ramon Salguero, head of Telefónica's NFV initiative, admits virtualization initially means greater complexity, but with the right abstraction layer, it is possible to create a services-driven network architecture. He explains how Telefónica's current trials and initiatives are aimed at doing that, and what his company and other carriers need to ...
LRTV Interviews
Gigabit Europe Takeaways

10|5|15   |   03:47   |   (0) comments

Participants from the inaugural Gigabit Europe event in Munich share their key takeaways from the conference.
Women in Comms Introduction Videos
Intel Urges Women to Take Advantage of Their Seat at the Table

10|5|15   |   4:27   |   (1) comment

Have inclusive and constructive conversations, attach a bigger meaning to your work and get involved in the cause, Intel's Monique Hayward advises women in comms.
LRTV Interviews
BT Updates on Plans

10|2|15   |   03:16   |   (2) comments

Peter Bell, CIO at Openreach, the access network division at UK incumbent BT, provides an update on the operator's trials and how Openreach is planning to deploy the broadband technology in its street cabinets.
Telecom Innovators Video Showcase
Sonus Shakes Up SD-WAN

10|2|15   |   7:22   |   (0) comments

Sonus CTO Kevin Riley sat down with Light Reading to discuss the trajectory of the company, its SDN ambitions and why Sonus is taking a market-disruptive approve to SD-WAN.
LRTV Interviews
CityFibre's Gigabit Vision

10|1|15   |   03:18   |   (1) comment

Mark Collins, director of Strategy & Public Affairs at competitive UK city network operator CityFibre, talks about his company's plans to help build Gigabit Cities.
Upcoming Live Events
October 14-15, 2015, New Orleans Ernest N. Morial Convention Center, New Orleans, LA
November 5, 2015, Hilton Santa Clara, Santa Clara, CA
November 17, 2015, Santa Clara, California
December 1, 2015, The Westin Times Square, New York City
December 2, 2015, The Westin Times Square, New York City
All Upcoming Live Events
Network appliances have a strong value proposition in today's networks and will continue to do so in the NFV and SDN-enabled networks of tomorrow.
Hot Topics
Eurobites: Dunroamin'
Paul Rainford, Assistant Editor, Europe, 10/2/2015
M&A Speculation Swirls Around Juniper
Ray Le Maistre, Editor-in-chief, 10/6/2015
Cisco's Chambers Rules Out Political Bid
Mitch Wagner, West Coast Bureau Chief, Light Reading, 10/6/2015
Infinera Fleshes Out Its Metro 100G Story
Ray Le Maistre, Editor-in-chief, 10/7/2015
AT&T Gets Green Light for VoWiFi
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 10/7/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
With so many new and exciting communications technologies now under development, it's easy to get caught up in the industry's escalating hype cycle. That's why the ...
Last week saw a big day in the 15-year history of Light Reading when Editor-in-Chief Ray Le Maistre and I were invited to interview the Deputy Chairman and Rotating ...
Cats with Phones
"What?! I'm on with Finisar about their stock price tanking" Click Here