Straitshot Pitches Proprietary WAN

Sticking to Layer 2, a startup claims it has a service that is cheaper than Frame Relay and more secure than VPNs

June 16, 2004

3 Min Read
Straitshot Pitches Proprietary WAN

The multiservice edge -- where Layer 2 networks get consolidated onto a Multiprotocol Label Switching (MPLS) core -- is all the rage, but there's one startup preaching a different approach, one that avoids MPLS altogether in most cases.

Straitshot Communications Inc. uses a proprietary routing method to connect Layer 2 flows from different providers, allowing it to make a hodgepodge of connections look like a private WAN. The company debuted the service this week after six months of beta trials.

An enterprise building a companywide Layer 2 network typically has to stick to one service provider. Straitshot's plan is to provide a central hub that can connect all the enterprise's sites and switch among them. That allows ATM or Frame Relay circuits from different service providers to behave as one network, creating the illusion of a private WAN.

The concept resembles a VPN but avoids exposure to the Internet, for those companies worried about problems such as denial-of-service attacks.

Straitshot builds its own equipment but isn't interested in being an equipment vendor. "Right now we are positioning ourselves as a service provider," says Mark Coluccio, chief technology officer. "We're a Layer 2 aggregation point for national and regional carrier networks."

The benefit is the ability to cheaply link faraway offices to the rest of the network, because an enterprise can now seek out the cheapest provider. "If a company were to try to manage that on their own, AT&T or other carriers could do that, but they might not be cost-effective in every market," says Aaron Lee, owner of data-services reseller Maverick Networks LLC.

Straitshot even has the obligatory voice-over-IP (VOIP) play. Intra-office VOIP calls can be carried over ATM connections to Straitshot, thus retaining their ATM prioritization and avoiding transit across the actual Internet. Calls outside the office would be deposited onto the Internet by Straitshot.

Straitshot potentially steals business from Frame Relay providers such as AT&T Corp. (NYSE: T) and MCI Inc. (Nasdaq: WCOEQ, MCWEQ), but it also buys bandwidth from them. Part of Straitshot's business model involves leasing connections from those providers, then reselling them as a Straitshot service.

Given that Frame Relay is a $9 billion-a-year business for MCI, Straitshot CEO Robert Hogan doesn't think the big carriers are worried about his 18-employee company. "It'll be a long time before we become a threat to them," he says.

Based in Bellevue, Wash., Straitshot has concentrated on West Coast business so far, but an East Coast facility should be open within a few months. Eastern states give Straitshot a richer territory to mine: The smaller local access transport areas (LATAs) make traditional point-to-point connections more awkward, Hogan says.

Straitshot was privately financed in one dose of $5 million. Officials say they don't expect to need another round. The company started beta services at the end of last year and now claim 11 customers, including the Nevada Bob's Golf chain of stores and a small fraction of The Boeing Co.

— Craig Matsumoto, Senior Editor, Light Reading

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