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Optical/IP

Light Readers Torn Over Policy Decisions

A recent poll about Light Reading's Top Ten Private Companies reveals that readers feel strongest about the two subscriber policy management companies making their debut appearances on the list, but are split as to whether they're the best selections or the worst.

Rhode Island-based Tazz Networks Inc. and Ottawa, Canada-based Bridgewater Systems Corp. drew both skepticism and approval of almost half of the 350 or so people who completed the poll (see LR Names Top Ten Privates).

The results underscore the contention that policy management is one of the hottest technology topics in telecom today for carriers delivering more and more IP services over their networks. Now that broadband is becoming more ubiquitous, carriers have an immediate need to manage bandwidth and control access to services (see Bridgewater Revenues Up 43%).

But the jury may still be out on the cost-effectiveness of policy management solutions provided by the likes of Tazz and Bridgewater, or perhaps the profitability in selling the technology.

Last week’s poll asked readers which Top Ten companies were overrated, and which might reach some form of liquidity event first.

Almost a third of the polltakers -- 106 people -- felt that Tazz, currently holding down seventh place, doesn’t belong on the list.

Tazz CEO Andy May chalks that result up to the grousing of other Top Ten wannabes (see Tazz Welcomes May in June). “I think you can explain that by all the people that didn’t make the list -- that’s who’s voting against us,” May says. “It’s probably the number 11 through number 19 companies that are bitter about being left out.”

Bridgewater Systems also took some fire, as 19 percent of our polltakers think the company, currently seated in fourth place in the Top Ten, shouldn’t be listed.

But many of our readers feel just as strongly in favor of Tazz and Bridgewater. The duo drew the most votes in the poll’s second question: Which company will reach liquidity first?

Of the 345 people who answered that question, 72 (20 percent) felt Bridgewater would reach a liquidity event soonest, while 56 (16 percent) believe Tazz is the company-most-likely.

Tazz began developing broadband policy management solutions four years ago. The company's product is now being pre-integrated into 's (Nasdaq: CSCO) metro gear, and is set to figure in 's (NYSE: BT; London: BTA) 21st Century Network (see BT's 21CN: Metro Partners Under Wraps ).

Bridgewater has been around since 1997 with little more to brag about than just surviving. But its market seems to be heating up; the company says it's had five consecutive quarters of profitability and believes more are on the way (see Bridgewater Revenues Up 43%). The Bridgewater software is now being baked into key Alcatel (NYSE: ALA; Paris: CGEP:PA) platforms such as the 7750 and 7450 routers.

— Mark Sullivan, Reporter, Light Reading

fgoldstein 12/5/2012 | 3:06:41 AM
re: Light Readers Torn Over Policy Decisions I'm not so pessimistic as alchemy. It comes down to what policy servers bring to the party. Andy's a smart cookie so he probably wouldn't have joined Tazz without good reason.

I don't really understand their functions in detail, but they seem to rather different from, say, IMS or IPspheres filters, which are based on Deep Packet Inspection of the payload. Policy doesn't have to do that. It could be more like what a good old circuit-switch does, for instance -- identify the TCP/IP equivalent of a call request, find the resources, and set it up if the policy is met. The payload can remain off limits. This is a lot less intrusive than IMS. Also cheaper, but still a potentially useful world when multimedia applications and telephony impose their own demands upon networks.

TCP/IP's native "best effort" (a euphemism for "no effort at all") policy is appropriate for a broad range of data-transfer applications, but network operators and users are looking for more granularity.

Just don't block access to anything or look too deep inside the envelope and we'll get along just fine.
alchemy 12/5/2012 | 3:06:41 AM
re: Light Readers Torn Over Policy Decisions I look at this from a market size point of view. How much will a service provider be willing to pay for a policy server? A buck or two per subscriber who actually needs QoS services on the network? The worldwide market for policy servers can't possibly create a significant company even if it has 100% market share. There are a bunch of companies in this space and they're going to be competing on price. There's probably an exit strategy for several companies to get swallowed up by bigger fish but there's only one Cisco and lots of minnows. By the time you give the venture capitalists their liquidation preferences, nobody who isn't a founder or vice president is going to make much money on any of these companies. Tazz, for example, has $25 million of VC money ($6M C, $10.5M B, $7.7M A). They replaced management in conjunction with their rather small C round. If you assume they have a "Sell to Cisco" exit strategy, how much could they possibly go for? $50 million? $25 million if they chew through that $6 million C round and go in a distress sale?
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