Given the number of carriers funded by Cisco Systems Inc. (Nasdaq: CSCO) that have fallen on hard times, the term "Cisco-Powered Network" may be more of a warning label than an endorsement (see Cisco's Under-Powered Carriers ).

The latest Cisco network to have money trouble is Cambrian Communications LLC, the carrier owned by Cambrian Holdings LLC, which filed for Chapter 11 bankruptcy protection last week. The only unsecured creditor listed in Cambrian's bankruptcy filing was Cisco Systems, which Cambrian owes nearly $69 million.

Cambrian operates metro area networks along a backbone that connects New York, Philadelphia, Baltimore, and Washington. Its original plan was to provide wholesale bandwidth services to CLECs and other carriers in that region that didn't want to pay the prices charged by incumbent carriers such as Verizon Communications Inc. (NYSE: VZ).

In April, Cambrian announced three customers, but it didn't name them in its press release and wouldn't reveal them to inquiring reporters (see Cambrian Launches Metro Network). It says it has more than 20 customers now.

Cambrian's assets were listed as between $0 and $50,000 and its debts were listed as less than $100 million. Cisco originally supplied the company with a $150 million vendor financing facility, but Cambrian never used the entire amount, according to Chris Tarbert, Cambrian's VP of sales and marketing.

The carrier names Cisco as its only equipment supplier and says that now that it's reorganizing, it doesn't anticipate needing any new gear for while. "I think we'll have enough equipment to get us to a point where our revenue rate will equal or eclipse our monthly burn rate," Tarbert says.

Cambrian was founded in early 2000 and was initially funded by its management team and the venture capital firm Duff Ackerman & Goodrich.

The carrier holds the distinction of being the first customer that bought Cisco's 15200 metro DWDM box and its ONS 15900 Wavelength Router, a product that was canceled in April 2001 (see Cisco Plods Toward Optical Portfolio and Cisco Kills Monterey Router). Cambrian also uses Cisco's 15454 Sonet add/drop multiplexers, its 12000 Series routers, and its Catalyst 6500 Ethernet switches.

Of course, Cisco hasn't bet all its hair on the service provider market. At the end of its second fiscal quarter of 2002, the company's outstanding commitments were approximately $1.7 billion, of which about $1 billion was eligible for drawdown. When contrasted with its cash and investments -- $21.5 billion as of July 27 -- Cisco has risked comparatively little, with mostly negative results.

— Phil Harvey, Senior Editor, Light Reading
www.lightreading.com