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Lucent Invests in ISPSoft

Light Reading
News Analysis
Light Reading
6/26/2000

The New Ventures Group of Lucent Technologies Inc. http://www.lucent.com (NYSE: LU) today announced it's taken a minority stake in ISPSoft Inc. http://www.ispsoft.com, a startup that plans to rollout later this summer a software package for setting up, activating, and monitoring the performance of IP-based carrier services (including those running over optical networks).

The deal was signed by Lucent's New Ventures Group (not to be confused with Lucent Venture Partners, which provides venture capital). The group is tasked with finding and developing technology in areas in which Lucent lacks expertise. In this case, the IP provisioning market--which Lucent says will grow to $4 or $5 billion over the next few years.

Lucent declined to specify how much it's put into ISPSoft, saying only that it has made a "significant" minority investment, in part by licensing "certain intellectual property" from Bell Labs, Lucent's R&D division, to obtain its share. Other ISPSoft investors include Signal Lake Venture Fund LP http://www.signallake.com, which also doesn't specify the size of its stake.

Lucent didn't have to look far for this investment. ISPSoft's president and CEO, Binay Sugla, was a Lucent director before joining the startup in April. According to his bio, posted on the ISPSoft Web site, he "created a highly successful IP management program for Bell Laboratories."

Lucent could benefit by Sugla's bringing it all back home. It needs the ISPSoft software, some think, in order to make up for gaps in its current IP provisioning line. Lucent presently owns software for network customer care (billing, workflow management, and similar tasks), thanks to its acquisition of Kenan Systems Corp. http://www.kenan.com late last year. But Kenan's product line has lacked some sophisticated IP provisioning capabilities, such as creating multiple service classes for IP networks, that ISPSoft may be able to make up.

Asked today whether Lucent will incorporate or package ISPSoft products into Kenan's range, Tom Uhlman, president of Lucent New Ventures Group, said: "That is certainly an opportunity we'll be exploring, although we have no decisions at this time."

But some observers think the entire ISPSoft strategy may be misguided. "I was a bit bemused by this move," says Tom Nolle, president of consultancy CIMI Corp. http://www.cimicorp.com. "Lucent's acting more like a Fuller brushman these days than a consultative seller. I'm not sure what they mean to accomplish with this." He says that Lucent can't hope to get big money from selling software to domestic or international ISPs at this point in time. "Who the hell are they going to sell this to?" he says.

Nolle thinks there's some chance ISPSoft may be used to augment Lucent's Navis line of element management systems, which are used to monitor, configure, and control Lucent's line of broadband switches. Other sources have said that the Navis products, which came from a variety of vendors Lucent acquired over the years, could use better integration. Since ISPSoft also offers integration services, the deal could help.

There are other concerns, however. ISPSoft won't be offering support for Multiprotocol Label Switching (MPLS) or for optical networking in its first release, company spokespeople say--even though those items are on the development plan. The fact that MPLS is shaping up to be a key provisioning tool for next-generation networks could mean that ISPSoft will fall behind if it doesn't support it in an early release.

-- by Mary Jander, senior editor, Light Reading http://www.lightreading.com

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