Actelis Draws High-Profile Investors

$45 million third round brings Actelis’s funding total to $74 million

July 2, 2001

4 Min Read
Actelis Draws High-Profile Investors

Actelis Networks last week announced it closed a $45 million third round of venture capital funding. Can the cash infusion help solve the woes in the broadband access space?

Actelis, of Fremont, Calif., says it can deliver 45-Mbit/s symmetrical bandwidth to multitenant office complexes over twisted-pair copper lines with reliability on par with fiber optics but without the hassle of digging trenches and obtaining construction permits. What’s more, the company claims it can overcome the last-mile limitations of DSL technology with the ability to extend its signal a longer distance.

Although its products are still in a test mode, Actelis has impressed some high-profile investors. The round that just closed adds $19 million to a $26 million round that the company announced as being closed in May. “We left the door open, and we did not anticipate such a high demand,” says CEO Yuval Baron.

Those chipping in for this presumably final increment were Anschutz Investment Co. (the founder and a major shareholder of Qwest Communications International Corp. (NYSE: Q), Innovacom (France Telecom’s venture capital unit), SSB Capital Partners (Salomon Smith Barney’s merchant banking fund), Draper Fisher Jurvetson‘s MeVC Fund, and Vertex US. Earlier investors in the round were New Enterprise Associates, U.S. Venture Partners, Walden International Investment Group, Global Catalyst Partners, and Vertex Management.

The earlier, $26 million round was led by Carlyle Venture Partners with backing from all existing investors. Carlyle's Anand Gowda took a board seat.

The funding round brings Actelis’s funding total to $74 million. Baron does not anticipate needing any more private funding and expects to have an initial public offering in about two years when the company is profitable.

The technology, dubbed by the company as Spatial Division Multiplexing (SDM), requires a box at the local carrier’s central office and one at the customer premises. One drawback of Actelis’s current product is that it requires 24 pairs of copper to deliver 45 Mbit/s bandwidth. Baron says the next generation will cut the number of pairs to 12.

But Actelis officials say that if a customer has fewer lines available, a smaller number of wires can be used to deliver proportionally less bandwidth. And aside from the obvious advantages of not having to lay cable, they boast SDM has several pluses compared with running multiple DSL lines from a central office to the customer premises.

“The customer is getting a bigger pipe and usually a more cost-effective connection that is more reliable,” says JDS Uniphase Inc. (Nasdaq: JDSU; Toronto: JDU) chairman Marty Kaplan, who is also a member of Actelis’s board. “There are also a whole lot more applications such as using this as a DSLAM back-haul facility or a DS3 pipe.”

Baron claims the bit error rate of SDM is “fiber quality,” which is 10,000 times better than the bit error rate of ordinary copper. Because of this, he claims, near error-free connections can be made over poor quality copper to older buildings, and SDM can deliver high quality to 18,000 feet from the central office vs. 12,000 to 15,000 for existing copper loop infrastructure.

While Baron claims his technology will cost carriers only about a quarter of what they pay for fiber installation, others question how much of a bargain it will be. “This is not likely to be very cheap,” says Jim Lawrence, program director of convergence strategies and network architectures at Stratecast Partners. “But this is important to have a bit error rate competitive with Sonet.”

North Pittsburgh Telephone Co. just completed a trial of Actelis’s first products, which have yet to be named, and was able to deploy them in six hours. Baron says another carrier is currently in trials under a non-disclosure agreement. He expects to launch the products commercially in the fourth quarter and enter the European market in late 2002 and Asia in 2003.

Perhaps Actelis’s biggest bragging point is a claim to be able to increase bandwidth to 155 Mbit/s in another year and 300 Mbit/s in 2004, thanks to the likelihood of improved circuitry and algorithms.

If this goal is achievable, it will be the fruit of several years’ effort for Actelis, which was founded by Kamran Elahian in 1998 and has since grown to 100 employees. Elahian also founded Cirrus Logic, Centillium, NeoMagic, and other Silicon Valley companies.

“It took a number of years to create all the algorithms,” says John Metz, executive vice president of Sterling Research. “If it does what they say it will do, Actelis can go to service providers with an alternate solution that will be less costly to them and their customers.”

- Tom Davey, special to Light Reading

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like