Alcatel Salutes General Bandwidth
The $15 million is the first tranche in a round that will eventually total $20 million with participation from General Bandwidth's existing investors, which include Invesco, SBC, Sevin Rosen Funds, Texas Instruments Inc., Thomas Weisel Capital Partners, Trellis Partners, and Venrock Associates. The vendor expects the infusion will carry it to breakeven in 2005.
General Bandwidth will use the capital to further integrate its voice gateway, which enables voice calls between Class 5 switches and IP-based networks, with Alcatel's fiber optic equipment. Alcatel has turned into a valuable sales channel for General Bandwidth, which has won about 10 of its 37 customers in conjunction with the French equipment maker. A case in point is SBC's FTTP initiative, from which the young company stands to gain about 15 percent of the revenue from equipment sales.
"The Alcatel relationship came down to a make versus buy decision for Alcatel," says Brendon Mills, CEO at General Bandwidth. "Our relationship and our product have been strong enough that Alcatel decided to partner with us to facilitate the voice part of the equation."
In addition, General Bandwidth will apply the cash infusion to expanding aggressively into the voice-over-IP market. The company's equipment is going through PacketCable certification at CableLabs in preparation for a sales push into the cable industry. The firm has been shipping VOIP products for two years and has at least ten customers deploying equipment, including Asia Pacific Online Service Inc., Hancock Telecom, and Rochester Telephone Co.
"We spent the first five years at the company getting that cornerstone RBOC win," Mills says. "The second five years will be spent becoming the best solution in voice-over-IP."
Founded in 1999, General Bandwidth has spent its formative years weathering a downturn of historic proportions in the telecom industry. "We saw things bottom out last summer, and we're feeling like a survivor," says Ken Cavanaugh, the company's director of business development. "The last two or three quarters have been our best ones so far."
— Justin Hibbard, Senior Editor, Light Reading