Startups abound in the next buzz wireless market, according to the latest Unstrung Insider

May 2, 2005

6 Min Read
The Convergence Contenders

Mobile core convergence infrastructure is shaping up to be the next interesting market for wireless startups and the next possible competitive threat for established vendors, says the latest Unstrung Insider report.

The report, "Routes to Roam: Convergence in the Mobile Core," highlights five startups that look like leading contenders in the convergence game: They are Azaire Networks Inc., BridgePort Networks Inc., Kineto Wireless Inc., LongBoard Inc., and NewStep Networks.

So what is mobile core convergence exactly? For the time being, let's skip the buzzwords -- cough, IMS, cough -- and try to get down to nuts and bolts.

Traditionally, in a cellular network, the core serves calls and data sessions to and from mobile devices attached to the operator's radio access network (RAN) and interfaces with other mobile networks, the public telephone network, enterprise IP networks, and the Internet. But the core also holds an operator's subscriber database, which contains information about subscriber policies and locations, and its interfaces with service and billing systems.

The new challenge for mobile operator is how to handle a multitude of new IP services over alternative access networks, such as wireless LAN and cable networks, while ensuring that it can bill for these new services and support customers roaming among different network technologies.

This is where the convergence infrastructure startups come in. But -- wouldn't you know it -- each of them has a slightly different technique for moving towards a converged future.

Azaire Networks is focused on wireless LAN access to the mobile core for data services, routing 802.11 traffic over the packet core network via a wireless LAN gateway in the carrier's network. Azaire's CEO Bill Howe told Unstrung recently that he sees voice as just another IP service that will eventually be free. "Carriers don't like it when I say that," he laughs.

Bridgeport Networks has a product called the Nomadic ONE Gateway, which is a SIP-SS7 gateway hosted in the mobile operator's core network. The gateway converts SIP signaling from the IP side to SS7 on the mobile circuit core side.

This is more a voice-centric approach, designed so that a call set up or terminated on an IP network can reach a phone on the cellular network. BridgePort's gateway interfaces with a mobile operator's HLR database to access subscriber data -- so the mobile operator retains control of the call.

Kineto Wireless is one of the major proponents of the Unlicensed Mobile Access (UMA) framework, which has been incorporated in the 3rd Generation Partnership Project (3GPP) cellular spec (see The Third Way of Convergence). This technology allows a user, equipped with a dual-mode cellular/WLAN handset, to make calls across any generic wireless LAN and IP network, with the call and signaling data encapsulated in secure IP tunnels. These tunnels terminate on an access gateway, which processes and passes call data to the circuit-switched or packet-switched mobile core network. LongBoard recently got into the mobile convergence game though its OnePhone application. This manages the handoff between wireless LAN networks and cellular networks by monitoring the relative signal strength of each network and sending this information back to an application server.

NewStep is targeting both wireline and wireless operators with an application server that unifies service delivery, user information, and billing across multiple networks.

So, as the report's author, Gabriel Brown, points out, each of these vendors brings something somewhat different to the table, technology-wise, even though they are all addressing the goal of making the same services available to users across a number of different networks.

"Although startups have led the way in developing products that integrate 802.11 and cellular, there is no single, common approach that has been adopted by several competing companies," Brown writes. "Instead, startups have tended to develop products that differ substantially from one another."

One of the interesting questions for the future is how these different approaches will work with IP multimedia subsystem (IMS) architectures, as carriers begin to roll them out. At its highest level, IMS is envisaged as a unified architecture that can support a range of IP-based services for both packet- and circuit-switched networks and employ a range of different wireless and fixed access mechanisms. Many of the startups are positioning themselves as part of this unified future, but it's not yet clear how all the pieces will fit together.

Still, the mobile core convergence market is shaping up to be another fertile breeding ground for startups, in a fashion similar to the enterprise wireless LAN market before it.

This table shows how the startups shape up:

Table 1: Mobile Core Convergence Startups

Vendor

Founded; Location

Funding to Date

Value & Date of Last Round

Lead Investors

Head-count

Azaire

2003; Santa Clara, Calif.

N/A

$9M Series B, September 2004

Rustic Canyon Partners, Woodside Fund, Convergence Partners

52

BridgePort

2001; Chicago

$38M

$23M Series B, September 2004

TD Capital Ventures, Polaris Venture Partners, General Catalyst Partners, BCE Capital

85

Kineto

2001; Milpitas, Calif.

$60M

$35M Series C, June 2004

Oak Investment Partners, 3i, Mitsui & Co. Venture Partners, SeaPoint Ventures, Storm Ventures, Sutter Hill Ventures, Venrock Associates

80

LongBoard

1999; Santa Clara, Calif.

N/A; believed to be approx. $50-$60M

$21M Series B, March 2001

Enterprise Partners, Storm Ventures, InterWest Partners, CrossBridge Venture Partners, Berkeley International, Sun Microsystems, Nissho Iwai

60

NewStep

2003; Ottawa

$15M

$15M Series A, January 2003

Newbury Ventures, VenGrowth Capital Partners, BDC Venture Capital, B.E.S.T. Capital, Bell Canada

60

Source: Unstrung Insider



If this market lives up to even some of the hype around it, you can expect to see more from these startups. And quite possibly some M&A activity as the larger players figure what works -- and what doesn't -- in the convergence club. Major established players in this emerging market include Ericsson AB (Nasdaq: ERICY), Lucent Technologies Inc. (NYSE: LU), and Motorola Inc. (NYSE: MOT).

— Dan Jones, Site Editor, Unstrung

The report, Routes to Roam: Mobile Core Convergence, is available as part of an annual subscription (12 monthly issues) to Unstrung Insider, priced at $1,350. Individual reports are available for $900. To subscribe, please visit: www.unstrung.com/insider.

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