Coriolis Scores $32 Million
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