Since Silkroad Inc staged a big splash at the Telecom 99 show in Geneva last October, the innovative optical startup has gone very quiet. It's effectively shut down its web site - http://www.silkroadcorp.com -- stopped making public appearances and started shedding staff.

What's up?

The company has undergone a crisis but it'll survive to fight another day, according to Chris Rader, who took over as Silkroad's president last November. Rader, who had been "director of global education development" prior to the crisis, says Silkroad is about to be reborn. A new senior management team was approved at Silkroad's annual general meeting of shareholders last Saturday (Feb 5). And plans for "restructuring" the company and bringing in new money are in hand.

The fog will clear "in the next few weeks" according to Rader. "We will have products out the first half of this year," he adds.

Of course, Silkroad has made big promises before and failed to keep them. Last fall, Silkroad told Light Reading that it would ship products in the first quarter of this year -- a deadline that it will miss. It also said it was still negotiating its first round of financing. That seemed strange at the time, since most startups don't wait until they're about to ship products to raise their first round of financing.

It now looks as though those negotiations fell through, leaving Silkroad with a cash crisis. That probably left the founders in a position where they lost control of the company.

Rader declines to comment on this speculation, and says he has "no knowledge" of ex-Silkroad employees setting up a rival startup, a rumor currently circulating Silicon Valley. James Palmer, the inventor of Silkroad's innovative "Refractive Synchronization Communication"(RSC) technology, is still a Silkroad employee, Rader adds.

Silkroad's failure to live up to its own billing is making people gun-shy. "I don't think [Silkroad] technology will be used in live networks for at least another 12 to 18 months," says an early investor in Silkroad, who requested anonymity. Having to wait a long time to see whether Silkroad can deliver might deter potential investors looking for quick returns.

Silkroad's bizarre marketing message hasn't helped matters. It's tried to blind people with science, quoting the theoretical physics that lie behind its invention rather than spelling out the way its technology works. It's wanted to keep that secret while its patents are still pending. However, its smoke screen has been so effective that many people have gone away puzzled, suspecting that Silkroad is either a bunch of crooks or a bunch of cranks. Others point out that the equations and formulae used in Silkroad's presentations don't actually add up. One person who was given their pitch describes it as 'amateur science.'

This doesn't mean that Silkroad's RSC technology won't be worth the wait -- if it can solve its funding woes and deliver it.

Silkroad claims that RSC will carry terabits of traffic a second over a single strand of fiber in a much simpler way than current DWDM (dense wave division multiplexing) developments. According to the vendor, it enables different streams of traffic to be carried over one huge bandwidth channel rather than over scores of smaller channels, which is the way that DWDM tackles the problem. This eliminates the need for scores of lasers, filters and so on, slashing costs.

And that's just for starters. Silkroad says its technology also extends the distance over which light can be transmitted, eliminating expensive electrical regeneration of signals. In addition, it's supposed to provide a simple way of splitting off streams of traffic at intermediate stations, performing a similar function to an optical add-drop multiplexer, at a fraction of the cost.

For now, however, one thing is certain: Silkroad's problems have caused a staff exodus. "We have been getting a number of resumes from them," says Dawn Hogh, vice president of marketing at Kestrel Solutions Inc. (http://www.kestrelsolutions.com), which is developing products based on another another bandwidth boosting scheme called FDM (frequency division multiplexing; seeBattle Begins Between FDM Twins).

- by Peter Heywood, international editor, Light Reading http://www.lightreading.com