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Optical/IP

Coriolis Scores $32 Million

Coriolis Networks Inc. plans to announce tomorrow that it has secured $32 million in third round funding and has won its first customer contract, with Marietta FiberNet, a subsidiary of a Georgia-based utility.

The $32 million is the "first portion" of its third round, the company says, and comes from a mixture of existing investors -- Bessemer Venture Partners, New Enterprise Associates (NEA), and Columbia Capital (not Bogota) -- and new ones -- TL Ventures and Enertech Capital Partners. This brings Coriolis’s total funding to date to $74 million.

The round of funding and the customer contract suggest that Coriolis has got something special -- something that helps it stand out in a crowded marketplace for multi-service provisioning platforms.

The special something is a way of handling circuit and packet based traffic in its native format -- except that it’s not that special. Native Networks Ltd., an Israeli startup headquartered in London, appears to have something very similar -- and the chances are that other vendors will follow suit as the market for this type of equipment materializes.

Here’s the big picture. Right now, most multi-service provisioning platforms fall into one of two camps. The first camp handles everything as circuits, which is just the ticket for TDM (time division multiplex) traffic such as voice and leased lines. However, it’s not an efficient way of handling packet-based traffic, carrying data, particularly if it’s bursty, as much of it is.

The other camp handles everything as packets and deals with TDM traffic by emulating circuits with prioritization schemes. The jury’s still out on whether such schemes can guarantee service quality when handling lots of circuits.

Coriolis and Native are developing boxes that give operators a third choice -- a way that avoids awkward compromises and helps them squeeze a better return out of their existing investments in Sonet/SDH infrastructure.

Native’s marketing literature boasts of a four month payback period for a typical network, compared to 10 months for a gigabit Ethernet over DWDM solution. Comparable Sonet/SDH alternatives are 10.4 months for a "low-order" solution and 14 months for a "high order" solution, it says. Coriolis claims a similar reduction in payback period, according to Greg Wortman, its vice president of corporate marketing.

Of course, comparisons of this sort are easily skewed by adopting assumptions that may or may not turn out to be valid in different cases, and the only way of figuring that out is to go back to basics and look at fundamental technology.

Coriolis and Native both provide a way of carving off some of the bandwidth in Sonet/SDH networks for handling packets, and treating this as one big pipe rather than lots of little ones. The remaining bandwidth handles TDM (time division multiplex) traffic -- typically voice and leased lines -- as normal.

The one big pipe carries multiple streams of bursty data traffic a lot more efficiently than lots of small ones, because the bursts don’t all happen at the same time. Creating this big pipe is done using Sonet/SDH "virtual concatenation", clumping together lots of smaller STS1 (51.84 Mbit/s) or VT1.5 (1.55 Mbit/s) channels in a way that makes them work as one. The technology was standardized several years ago, but chips implementing it only started appearing on the market a few months ago, giving Coriolis and Native their opportunity.

Within the big pipe created by virtual concatenation, Coriolis and Native prioritize different packets using proprietary protocols. Native says that its protocol, called APT (for asynchronous packet transport) is based on MPLS (multi-protocol label switching) and makes it easier for operators to manage their networks and provide different grades of service at different prices. Native is hoping that this aspect of its technology will end up falling under the planned resilient packet ring (RPR) standard (see RPR: RIP?).

Other vendors are likely to make use of the same fundamental technologies to develop similar equipment. Siemens AG (NYSE: SI; Frankfurt: SIE), for instance, is already using Sonet/SDH virtual concatenation in its metro box, according to Stephan Neidlinger, its vice president, business development, optical networks. Siemens intends to aggregate and prioritize data traffic by incorporating an Ethernet switch in its box in the second half of 2002, he adds.

The big question is whether Coriolis and Native can make an impact before big vendors like Siemens arrive on the scene and leverage their existing relationships with large carriers.

Right now, Coriolis appears to be ahead. Its equipment has been in lab trials with six carriers since the beginning of this year, and is now in field trials with "a couple" of carriers, according to Wortman. As already noted, it now named a (small) customer, Marietta FiberNet. In comparison, Native only recently announced its first beta customer, Storm Telecommunications Ltd. (see Native Networks Aims at Europe's Edge). Coriolis has also raised a lot more money -- $74 million against Native’s $22 million.

Native is focusing its initial efforts on the European market, and is aiming to cover North America via reseller agreements it has signed with LuxN Inc. and Sorrento Networks Corp. (Nasdaq: FIBR). Other deals are under negotiation, according to Steve Harbour, Native’s CEO. The resellers will offer customers a package of their metro DWDM equipment with Native’s on-ramps, according to Harbour. Coriolis recently opened its office in Europe, having focused its efforts on North America so far.

The problem for Coriolis and Native is that the really big carriers, the ones still spending money, aren’t terribly interested in finding a way of handling data more efficiently on their networks because it still represents a tiny proportion of their revenues, according to Siemens’ Neidlinger. That’s partly because the majority of their data services -- leased lines, frame relay and Internet access -- are still provided over TDM circuits, he adds.

Non-TDM traffic represents less than five percent of the traffic handled by big carriers, according to Doug Green, vice president of marketing for Ocular Networks Inc.. "Next year, a few tens of thousands of Ethernet circuits may be provisioned in the U.S., at best. Somewhere between 5 and 10 million T1s (1.5 Mbit/s circuits) will be provisioned," he writes in an email message to Light Reading. As a result, the big carriers are much more interested in replacing current digital cross connects with Sonet/SDH add/drop multiplexers that occupy far less space and consume far less power, Green contends. This is Ocular's focus (see Ocular Takes On Tellabs).

The issue of migrating to a packet-based network was important two years ago; now it's second to cutting the cost of existing TDM infrastructure, says Green.

— Peter Heywood, Founding Editor, Light Reading
http://www.lightreading.com
SiO2 12/4/2012 | 7:43:18 PM
re: Coriolis Scores $32 Million coriolis and native are building
knock-offs of the geyser box, which
pioneered the concept of handling
multiservice traffic over dynamically
resizeable low-order virtually
concatenated SONET/SDH timeslots.

the fact that geyser actually delivered
the product and was not able to find a
market in which to gain a foothold may
be an indicator of what the future holds
for these guys.

SiO2
fhe 12/4/2012 | 7:43:16 PM
re: Coriolis Scores $32 Million You haven't seen nothing YET...
netskeptic 12/4/2012 | 7:43:14 PM
re: Coriolis Scores $32 Million It seems to me that this is another indication of the trend of moving away from multi-vendor interoperability as central requirement for the internetworking. Coriolis is offering closed proprietary solution and it seems viable to at least a few people with money.

Thanks,

Netskeptic
Confucius 12/4/2012 | 7:43:12 PM
re: Coriolis Scores $32 Million Coriolis is offering closed proprietary solution and it seems viable to at least a few people with money.

True, Aleksy, but how much money? It will be interesting to see if they can close a large carrier, because it's not clear to me how this dual ended solution preserves the carriers' existing investments. That would seem to make it a tougher sell.

I'm not sure that I buy that this company is a "Geyser clone", though. They do seem to have some interesting technology and ideas, and sufficient engineering talent to bring a solution to bear. Good to see that they got funding in this difficult climate. Apparently they have the ship headed in the right direction, which is encouraging. One wonders how much of a valuation whack they had to take, and how much dilution that will translate into for the worker bees.

Good job, Coriolis. You've got a long way to go, but it's great to see signs of encouragement in the startup world. It's so much better than yet another layoff announcement.

Greg Wortman 12/4/2012 | 7:42:11 PM
re: Coriolis Scores $32 Million test
lucender 12/4/2012 | 7:34:28 PM
re: Coriolis Scores $32 Million of workforce today.
HarveyMudd 12/4/2012 | 7:26:01 PM
re: Coriolis Scores $32 Million SOnet/SDH ring boosted DWDM has enogh capacity that no other archiecture is needed. The company claims that it can transport data in its native format. This no thriller as somewhere the data needs to be framed.

The question that needs to be asked is: Will the company survive without support from the VCs? Will it generate enogh revenue from its product? Can a single product company can support itself from the revenue it wii generate?
allidia 12/4/2012 | 7:25:46 PM
re: Coriolis Scores $32 Million Harvey,
Do you really feel bashing this company is going to make Wavesmith a more valuable company? Face the facts... Its a Gorilla's market and no ILEC is going to buy from a company with less than 40,000 people. You should be concentrating on what your company is worth to a partner. With no revenue chances are $100m is too high. If you can last a year financially and get some revenue and run live traffic then you may see some good returns. Coriolis has as good a shot as anyone along Route 495
Pearl 12/4/2012 | 7:24:55 PM
re: Coriolis Scores $32 Million I remember more than a decade ago when a few no name companies, with only a couple of hundred employees, started going after the telecom carriers. It took them a few years to do it, but they built real companies: 1) was named Rockwell that turned into Alcatel, 2) was named DSC that Alcatel bought, 3) is named Fujitsu Network Communications. Other less notables have included Telco Systems, AFC and others (Ciena). All these companies started as single product (or single product family) companies. True, less than 1% make it, but to completely dismiss the possibility flies in the face of history.
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