Softswitch vendor MetaSwitch has adapted its product offering to target larger, VOIP-focused U.S. competitive carriers as it chases a greater share of the Class 5 replacement market.

A division of privately held Data Connection Ltd. (DCL), MetaSwitch claimed a stellar 2004, more than doubling its switch deployments (see Data Connection Reports Record Revenues). And the firm is expecting a bumper 2005, with revenues likely to double last year's tally, says Martin Taylor, MetaSwitch VP of technology strategy.

The year is off to a good start, as Taylor says MetaSwitch has landed two major carrier deals of more than 14 switches apiece, and a contract with a major CLEC that plans to migrate more than 300,000 of its 750,000 voice lines to VOIP. All three deals will ship in 2005, he says.

Now it has launched a new product, the CA9020 call agent server. Announced on Monday, the CA9020 could help MetaSwitch target larger service providers looking to deploy a distributed architecture, where a centralized call agent manages a number of media gateways nearer the edge of the network (see MetaSwitch Expands Softswitch Portfolio).

To date, MetaSwitch has been marketing its VP3510 softswitch, which combines a call agent and gateway in a single chassis. The company has shipped more than 90 of these, including 47 in 2004 alone, Taylor says (see MetaSwitch Announces Softswitch Customers, AMA.TechTel Deploys Ciena, MetaSwitch, and MetaSwitch Sees Softswitch Success ).

The CA9020 will broaden MetaSwitch's appeal, he adds, helping to attract the firm's target market of Tier 2 and Tier 3 carriers in the U.S., Canada, and the Caribbean that are buying into the distributed approach.

The move makes sense, says Graham Beniston, analyst at large for Heavy Reading: "They're going from the integrated to the distributed architecture, and have a good, solid technical base to do that with. They've used the integrated platform as a Trojan Horse to get into the carriers, and now they have the next stage to move forward with.

"I can see them doing well. And the relationship with Fujitsu is a good start in Europe," Beniston adds.

Fujitsu Telecommunications Europe Ltd. comprises the vendor's only OEM relationship, one based on a deployment at one of Fujitsu's DSLAM customers, BT Group plc (NYSE: BT; London: BTA). BT is using the MetaSwitch platform to offer VOIP services to the broadband customers of its cable operator rivals (see Fujitsu Supplies VOIP to BT).

And Fujitsu Telecommunications Europe's director of business development, Marc Curtis, is clear why MetaSwitch was chosen as a partner. "We wanted a next-generation network voice platform that was a true Class 5 switch replacement and which had the look and feel of the PSTN with carrier-grade reliability. MetaSwitch was the only company that could meet our requirements," he says

But opportunities in the U.K., where MetaSwitch's technical development takes place, are limited compared with the U.S. market, which remains the firm's primary target. Taylor figures there are about 50 ILECs and CLECs with between 30,000 and 1 million voice lines, representing a $1 billion Class 5 replacement market. Greenfield developments would add to that pool.

He adds that the distributed architecture is very well suited to the U.S.'s regulatory environment. "In the U.S. you're not allowed to put a switch, anything with call processing capabilities, in a collocation cage, but you can put a media gateway there," says Taylor. That means the new product could sit centrally and the firm's standalone MG3510 media gateway could sit in collocation points.

But there's no shortage of competition in this market, with Lucent Technologies Inc. (NYSE: LU), courtesy of its Telica softswitch, and Nortel Networks Ltd. (NYSE/Toronto: NT) looking to defend their installed bases of circuit switches.

Taylor does his best disparage Telica's prospects ("People worry about what will happen because of what has happened in the past" with Lucent's acquisitions and softswitch strategy) and to diss at least part of Tekelec Inc.'s (Nasdaq: TKLC) portfolio ("The competition is coming from the Santera product, as Taqua appears to have disappeared"). (See Telica: Lucent's Good Buy, Lucent Performs Softswitch U-Turn, Tekelec Tests Softswitch Waters, and Tekelec Is Buying Taqua.)

Taylor also names CopperCom as a major competitor -- and he should know, having worked there (see MetaSwitch Hires VP).

CopperCom, which has been piling on new customers of late -- bringing its total to more than 90 customers and "way more than a hundred" switches deployed, according to a spokeswoman -- likewise regards MetaSwitch as a serious rival (see Mitchell Uses CopperCom for VOIP, Ponderosa Chooses CopperCom, and CopperCom Wins 100th Deal). The spokeswoman says the company encounters MetaSwitch in the majority of competitive situations. And, like MetaSwitch, CopperCom sees 2005 as a key year for Class 5 replacement business.

So what's next for MetaSwitch? There are no plans for an IPO or a sale, says Taylor. "We have no need for a financial event that would disrupt our strategy."

Instead the firm will expand its professional services offerings, continue to invest in R&D and product support, and address VOIP security issues as a key development area. More immediately, MetaSwitch plans to launch a SIP messaging and application server some time in the coming weeks, based on its parent company's unified messaging platform.

— Ray Le Maistre, International News Editor, Light Reading

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