When MRV Communications Inc. (http://www.mrv.com, Nasdaq: MRVC) bought Switzerland's Creative Electronic Systems SA (http://www.ces.ch, CES) for an undisclosed sum late last week, it did more than acquire a key source of intellectual property.

The buy allowed MRV gave to launch a company developing next-generation service provisioning platforms, and put it on an IPO fast track.

Called iTouch Communications Inc. http://www.itouchcom.com, the new outfit will sell software and hardware developed jointly over the past year by MRV and CES. CES itself will continue to operate with its present staff in Geneva as a wholly owned subsidiary of iTouch.

Company sources say it's "probable" that iTouch will file for IPO this year.

The iTouch product line will be based on distributed hardware - giving it a scalability advantage over traditional telecom management systems, which typically have centralized architectures.

The key offering in iTouch's line will be Red Sea, a series of subscriber management systems comprising software and networking cards from CES. The CES components have been used previously for real-time data acquisition and processing in ATM switches, aerospace equipment, and physics labs. They have been OEM'd by Nortel Networks Corp. http://www.nortel.com and Lucent Technologies Inc. http://www.lucent.com and deployed in key research by the European Laboratory for Particle Physics (CERN).

The new Red Sea series will pack CES cards and software into chassis placed alongside carrier switches. The units will monitor traffic and adjust it according to subscribers' Web-based requests for specific quality of service and prioritization schemes. Data on subscriber activity will be sent to third-party billing applications. iTouch plans to partner with key billing vendors to establish the link.

The key advantage of the Red Sea series, according to iTouch, is its ability to process lots of real-time data locally. "Keeping high-speed processing close to subscribers in very distributed networks is vital to an advanced and efficient approach," says Philippe Szwarc, iTouch's new CEO and a five-year veteran of MRV.

The Red Sea series will also initially include Red-C, a product MRV announced in April that operates along the same lines. But the existing Red-C does not have distributed routing table updates and integral Radius authentication in the local hardware units. These features and others, say iTouch sources, will be released in the new Red Sea series sometime early this summer.

iTouch also will sell another product formerly sold by MRV called In-Reach, an out-of-band network management system based on hardware units placed close to groups of telecom switches, routers, and other equipment. CES didn't play a role in its development. MRV says In-Reach is being used by Williams Communications Group http://www.williams.com to manage frame relay services.

On the downside, some carriers may resist adding yet another management system to their networks, especially one that requires hardware. Some service providers have invested millions of dollars in customized OSSs. Others would rather keep the control of network devices separate from their management.

Still, some heavyweight telecom operators - including America Online - are trialing Red Sea developments according to iTouch.

-- by Mary Jander, senior editor, Light Reading http://www.lightreading.com