BroadLight Inc. , the leading supplier of semiconductors and software in the very crowded GPON market, has closed a fifth round of venture funding worth $12 million.

The series E round of funding was led by Benchmark Capital , which now joins Azure Capital Partners , Broadcom Corp. (Nasdaq: BRCM), Cipio Partners, Delta Ventures Ltd. , Israel Seed Partners , Motorola Ventures , Star Ventures , and Tellabs Inc. (Nasdaq: TLAB; Frankfurt: BTLA) as an investor in the company.

BroadLight is the market leader and has the two biggest GPON customers in North America -- AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ). So why then does it have to keep raising money?

One possibility is the regulatory struggles that its two biggest customers have faced in deploying video services, which has in turn delayed the deployment of GPON. (See State Video Franchise Push Grows.)

"It's taking a while," says Tim Kellis, an analyst with the Stanford Financial Group who covers the PON chip space. "The reality is, in order for the service providers to offer video, they need local approval."

Kellis also notes that the longer it takes for the move to GPON to happen, the greater the risk BroadLight faces from competition and thus the greater need for funding. The GPON space in North America is crowded as it is and several new players have entered the market this year. (See Mindspeed Joins GPON Race and Ikanos Joins GPON Arms Race.)

BroadLight could not be reached for comment on this story.

— Raymond McConville, Reporter, Light Reading