Critical Telecom Gets $12.7M

Critical Telecom offers its FRED (Full Rate Extended DSL) product and banks $12.7M equity financing, led by VenGrowth Capital Partners

October 6, 2003

5 Min Read

OTTAWA -- Critical Telecom Corp., a leading developer of broadband solutions in the outside plant, today announced it has completed equity financing of approximately $12.7 million USD ($18 million CDN). The financing was led by VenGrowth Capital Partners Inc. Other investors include TELUS Ventures, Business Development Bank of Canada, and Crown Ventures Fund Inc.

Critical Telecom’s flagship product, FRED (Full Rate Extended DSL), enables telecommunications service providers to reach more customers, deliver enhanced services and effectively compete with cable companies. FRED delivers full-rate ADSL 25 km from telecom providers’ central offices, allowing them to deliver high-speed Internet and next-generation services to subscribers that cannot be currently serviced due to distance limitations. FRED can be installed more cost-effectively than competitive products, requires half the deployment time and uses existing telecommunications infrastructure in the outside plant.

“This equity funding allows us to expand our offerings and more aggressively pursue the U.S. and global marketplace,” said Oliver Cruder, President and CEO, Critical Telecom. “We’re seeing demand from telecom providers in these new markets for a proven, full-rate, extended DSL technology that reduces their capital expenditures and allows them to increase revenues through expanded service delivery to their customers.”

The financing follows Critical Telecom’s recent announcement that TELUS Corporation (TSX: T, T.A; NYSE: TU), Canada’s second-largest carrier, has fully deployed FRED. Critical Telecom has also deployed with two other carriers and made significant progress toward securing other customers.

“Critical Telecom’s technology is the ideal solution for carriers expanding their broadband footprint. The technology removes a large portion of active components from the harsh environment, while at the same time enabling carriers to provide full-rate DSL services to all subscribers,” said Mark Janoska, General Partner, VenGrowth.

“We are very pleased to broaden our partnership with Critical Telecom. The FRED product suite provides very significant capital and operating savings, and reductions in stranded investment, all while speeding a simplified deployment that leverages existing infrastructure investments,” said Mark Schnarr, Executive Vice President, TELUS Ventures.

The company has also expanded into the high-tech center of Ottawa, Ontario to tap the city’s large pool of engineering talent. The new offices are located in West Ottawa, an area known as “Silicon Valley North.”

In a separate release:

Critical Telecom Corp., a leading developer of broadband solutions in the outside plant, today introduced its flagship product, FRED (Full Rate Extended DSL). A transparent DSL extender, FRED delivers full-rate ADSL 82 kft (25 km) from telecom providers’ central offices, allowing them to deliver high-speed Internet and next-generation services, such as broadcast video and video on demand, to subscribers that currently cannot be serviced due to distance limitations.

FRED is the only transparent DSL extender to provide full-rate 8 Mbps ADSL for tiered and broadcast services to all customers simultaneously. Installation costs for FRED are up to 65 percent less than competitive products, such as remote DSLAMs and the equipment can be installed in one-third the time. FRED uses existing telecommunications infrastructure, including the cross-connect cabinets in residential and rural neighborhoods.

“FRED is exactly what today’s cost-conscious telecommunications providers are looking for,” said Mark Labbé, CTO, Critical Telecom. “We have a proven product that provides full-rate ADSL for subscribers who can’t currently get the service.”

Critical Telecom also announced completion of approximately $12.7 million USD ($18 million CDN) in new equity financing. The financing was led by VenGrowth Capital Partners Inc. Other investors include TELUS Ventures, Business Development Bank of Canada, and Crown Ventures Fund Inc.

Extended, full-rate ADSL key to boosting carriers’ revenues

Telecommunications providers want to maximize revenue with minimal capital and operating expenses. Many carriers would like to grow their revenues by adding new DSL services to customers who currently cannot be serviced. The Federal Communication Commission reports that 50 percent of all subscribers are beyond 12 kft (3.7 km) from a Central Office DSLAM. In other words, these subscribers are outside of the traditional ADSL reach and the telecom providers’ service area.

The primary barrier preventing carriers from meeting subscriber demand for full-rate ADSL is the ADSL signal’s rapid attenuation over copper infrastructure. ADSL with a data rate of 7 Mbps can only be delivered as far as about 9 kft (2.7 km) from the outside plant. But many copper loops in the outside plant extend to around 18 kft (5.5 km), leaving a substantial number of subscribers unable to access ADSL service. In the past, telcos were forced to rely on remote DSLAMs to provide increased reach. As a result, ADSL service deployment has been inhibited because this option is expensive, time-consuming to deploy, and troublesome to maintain.

FRED (Full Rate Extended DSL)

FRED comprises central office and outside plant equipment. ADSL data streams from a central office-based DSLAM are converted into a multiplexed optical signal and, usin 1 or 10-Gigabit transport components, the optical signal is sent from the central office to an existing cross-connect cabinet. At the outside plant cabinet, the electrical signal is reconstructed and demultiplexed, restoring the original ADSL signals for distribution to subscribers over existing copper connections. FRED uses digital transmission so that ADSL signal quality is not affected by fiber-optic cable length.

FRED is fully scalable and requires no new environmentally hardened enclosure, concrete pad or power trenching. There are no issues with central office-outside plant interoperability, since FRED is DSLAM independent and simply extends the range of whatever services are already deployed via the central office DSLAMs.

Critical Telecom Corp.

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