Wireless data infrastructure startup Megisto Systems seems no nearer to signing off on a commercial agreement for its IP infrastructure offering, but Carol Politi, the company's vice president for marketing, says Megisto continues to receive positive feedback from the two, unnamed, European carriers currently trialing the kit.

She did, however, deny that Telecom Italia Mobile SpA (Milan: TIM) is one of those two mobile operators, an idea floated by Unstrung back in July (see Megisto: Trialing in Tuscany? ). What led us to propose TIM? Because one of Megisto's backers is Saturn Venture Partners LLC, an independent firm with a capital commitment of $280 million from investors that include Telecom Italia Mobile and Telecom Italia SpA (NYSE: TI). With an investment relationship leading back to a major European mobile operator, that looked like a safe bet (especially for Megisto!).

The two mystery operators are "different types of operators, different sizes, different countries -- and one is very focused, very aggressive, on creating new enterprise services," hints Politi. Megisto plans to reveal more details about these trials in the coming weeks.

Megisto Systems is one of four privately-held and eight publicly-held vendors profiled in the recent Wireless Oracle report, Wireless Routers - A Market Waiting to Happen?

Talking at the UMTS Congress in Paris, Politi noted that Megisto is also now active in Asia, where the operators are "much more concerned about scale, whether the system can handle more than 1 million subscribers at a time, that sort of issue, which is exciting."

It seems, though, that the operators are still grappling with the problems and issues surrounding data service creation and delivery, especially to enterprise customers. "The operators would like to do more, but it's just so friggin' hard to do," exclaims Politi, especially when engaging with the IT departments of their enterprise customers. "It's the IT people [at the enterprise] that really need persuading, and they don't always want to consider adding what looks like much greater complexity to their systems" by managing wireless data services, she says.

But when exactly the trials and talks will end in a commercial agreement Politi could not say. The pressure is mounting, though, for Megisto to show its hand in a commercial deal, as larger, more established vendors, such as Nortel Networks Corp. (NYSE/Toronto: NT), solidify their positions as incumbent suppliers by delivering service node infrastructure as a part of a broader equipment deal. And another startup in the same space, WaterCove Networks Inc., recently announced its first commercial engagement, albeit with an operator (Orange SA) with links to one of its investors, Orange Ventures (see WaterCove Picks Low Fruit).

The market is particularly tough for the startups, says Gabriel Brown, Unstrung's research analyst and author of the Wireless Oracle report. Wireless routers, also known as GPRS Gateway Support Nodes (GGSNs) and Packet Data Serving Nodes (PDSN), are the primary interfaces between carriers' radio and packet core networks. In their next-generation guise, these wireless routers comprise a new class of equipment that adds sophisticated service creation, billing, and IP traffic management capabilities to this interface.

"The startups will have to demonstrate performance and functionality that is degrees of magnitude better than the established alternatives if they're to have any realistic chance of persuading carriers to purchase PDSNs or GGSNs independently of wider packet core or radio access contracts," says Brown. "Most carriers are working off a base of installed equipment that they want to continue to leverage. This evolutionary approach creates all sorts of interoperability issues, which gives an advantage to the incumbent vendors that also supply radio infrastructure and associated SGSNs."

In the meantime, companies such as Megisto continue to push their case to the carriers and look to develop new relationships at events such as the UMTS Congress and the upcoming CTIA show in Las Vegas. "These events are a great way to meet people you don't already know, but what we need to concentrate on is closing deals with the carriers we are already working with," says Politi.

— Ray Le Maistre, European Editor, Unstrung
www.unstrung.com

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