Opthos Inc. has raised $21.6 million in a series B investment round, bringing its total funding to $36.5 million. The startup says it will use the money to complete trials of its metro wavelength switching platform, the IW1000 True Optical System, by early 2002. Trials with two customers are about to start, and others are in the pipeline, the company says.

Opthos's new round solidifies its position as the first vendor to bring to trial a dynamic wavelength switch for metro use. Other companies, notably Movaz Networks Inc., have announced products but so far aren't to the point of issuing prototypes for trials (see Movaz Makes a Splash).

"We have a simple, powerful story," says CEO Robert Lundy. "When other vendors took over $100 million and have nothing to show, we showed up at Supercomm with an interoperable preproduction system after a first round of $14.9 million."

Lundy says the latest funding was provided at a higher valuation for the company than the previous round. The new round was jointly led by Advanced Technology Ventures and the Sprout Group. Other investors include Venture Law Group and Ken Oshman, a founder of Rolm who is now CEO of Echelon (Nasdaq: ELON), which makes control networks for home and industrial use. All four were part of the original investment group. A new investor, Crosslink Capital, also joined this round.

Interestingly, Advanced Technology Ventures also backs another company claiming to have an all-optical wavelength switch -- Innovance Networks of Ottawa. No conflict there, says general partner Wes Raffel. "Both Opthos and Innovance are pure photonics plays (or transparent networking)," he writes in a note to Light Reading. "Innovance is in the long-haul market. Opthos is in the metro core. One could feed wavelengthsdirectly to the other, or go through a cross-connect like CoreDirector.... [T]he two companies are complementary and focusedon different markets."

Opthos was founded in March 2000 by Lundy, who hailed from Xtera Communications Inc., a startup making S-band amplifiers for long haul transmission systems. Joe Parker, now CTO, also worked at Xtera.

The company made the most of its original funding, Lundy says, by managing to keep costs down and working with a minimum staff. The company still employs just 75 people.

Opthos began making noise, literally, at the Supercomm tradeshow in Atlanta this past June, hiring 10 or 12 picketers to chant and wave signs outside the convention center (see Is Opthos Over the Top? ). The display was aimed at attracting attendees to Opthos's booth, where a simulated network showed the vendor's IW1000 running with gear from Foundry Networks Inc. (Nasdaq: FDRY), Gotham Networks, LuxN Inc., and Metro-Optix Inc.

Part of the exercise was meant to show that Opthos had a product designed to work with third-party metro DWDM gear. Opthos says the IW1000 will switch wavelengths between edge devices, such as routers or switches, and DWDM systems in the core of the metro network -- that is, DWDM platforms situated within 4 kilometers of the central office or telco hotel.

This tack puts Opthos into competition not only with Movaz but with established players such as Ciena Corp. (Nasdaq: CIEN), Nortel Networks Corp. (NYSE/Toronto: NT), and ONI Systems Inc. (Nasdaq: ONIS), whose DWDM gear is also designed to link the metro core to edge devices.

But Opthos says its all-optical design, which eliminates the optical-electrical-optical (OEO) conversions those boxes perform, makes for a smaller device that consumes less power. Opthos also says it provides more flexibility and efficiency in wavelength switching. "Our system can assign a single wavelength on demand as needed," Lundy says.

Opthos says its IW1000 system will switch 64 wavelengths -- 32 with regular traffic, 32 in protection mode. It occupies a quarter of a telco rack and runs on 100 watts of power, Lundy says.

There's still work to do, however. Two prerequisites are necessary for the Opthos gear to provide fully functional dynamic wavelength switching in the metro core. First, edge devices need to support the C-band wavelength grid defined by the International Telecommunication Union (ITU). Most of the leading router and switch vendors with wavelength capabilities already do this; but not all.

Second, in order to achieve fully dynamic switching and assignment of wavelengths, Opthos's gear requires generalized multiprotocol label switching (GMPLS), a standard that's still in the works at the Internet Engineering Task Force (IETF). Other vendors need to support GMPLS, too, in order to work optimally with the Opthos kit.

Opthos intends to have its implementation of GMPLS ready by the second quarter 2002, but that's no guarantee that makers of edge devices will be ready by then. In the meantime, customers will need to rely on SNMP to manipulate the wavelengths in Opthos's IW1000.

At least one other startup, Sweden's Lumentis AB, is sidestepping the challenges of interoperating with other vendors' equipment by offering a package of metro DWDM gear with an all-optical switch (see Lumentis Faces Metro Challenge).

Overall, analysts say Opthos's chances look good, but the company will be challenged to prove its value in enabling carriers to roll out cheaper, faster services -- a task that puts them up against larger players like Ciena who've already dibbed a spot in carrier networks.

"New companies always have to fight the legacy network," says Ron Kline, senior analyst at RHK Inc.. "But it's really early, and Opthos is first. This is going to be a 'let's see' deal. I think their chances are good."

— Mary Jander, Senior Editor, Light Reading
http://www.lightreading.com

Want to know more? This very topic is the subject of a session at Lightspeed Europe,Light Reading’s annual conference, on December 4-6, 2001, in London. Details: Metro DWDM Equipment