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Optical/IP

Sentito Networks Scores $14M

A startup claiming a unique take on ILECs' circuit-to-packet migration has garnered $14 million in Series B funding, in part from one of Canada's leading service providers (see Sentito Feels $14M Coming).

Sentito Networks is counting Telus Ventures, the investment arm of Telus Corp. (NYSE: TU; Toronto: T), one of Canada's top ILECs, among new investors. Telus also is trialing Sentito's product and plans to act as a strategic partner to the startup.

It's an endorsement Sentito will need, as it escalates its foray into the North American incumbent telecom market -- the most difficult for any startup to penetrate these days.

Sentito is confident it has something unique to offer hard-to-sell RBOCs and IXCs, though. The three-year-old company, based in Washington, D.C., makes an access switch, signaling gateway, and management software for use by carriers seeking a smooth transition from legacy circuit-switched TDM and voice networks to more manageable and efficient ones based on IP data.

Hang on! Isn't this what softswitch players like Sonus Networks Inc. (Nasdaq: SONS) and Telica Inc. are attempting? Not to mention the likes of Nortel Networks Corp. (NYSE/Toronto: NT), which recently issued a barrage of enhancements to its Succession series to do just this (see Nortel Targets Carrier VOIP Migration).

Sentito says it reaches deeper into the access network than these vendors, providing SIP (Session Initiation Protocol) links between individual T1/E1 (1.5 Mbit/s and 2 Mbit/s) TDM, dialup, and DSL lines in legacy Signaling System 7 networks on one side and Gigabit Ethernet, packet-over-Sonet, or packet-over-SDH nets on the other.

"We can link directly to POTS [plain old telephone system] in the central office or at the curb," says Sentito's VP of marketing William Flanagan. Sentito's 120-Gbit/s chassis can thus replace a "whole lot" of elements, he says, ones other vendors need to consolidate voice lines for use on IP networks -- such as digital loop carriers or M13 multiplexers.

Flanagan claims one Asian customer was able to consolidate 50 central offices to 15 or 20 by deploying the Sentito solution.

Sentito claims its connections are "scriptable," meaning they can be set up to carry Class 5 features to circuits in carrier networks equipped with next-generation voice switching gear. To achieve this, Sentito has partnered with BroadSoft Inc. and other makers of so-called "feature servers" that consolidate Class 5 functions for delivery to IP networks.

Sentito's on-paper features impress at least one analyst. "[Sentito is] different because they handle the POTS stuff, others don't," says Norm Bogen, a director at In-Stat/MDR. Theoretically, the Sentito box is more robust than a next-gen DLC, he says, because it provides more connectivity and a way to support Class 5 features. Other solutions require more intermediary gear.

But Bogen acknowledges growing competition from several quarters. Besides big softswitch players and Nortel, companies like Gluon Networks Inc., Metaswitch, and Taqua Systems Inc. are offering Class 5 capabilities over "legacy" TDM circuits, a solution particularly attractive to rural telcos (see Taqua Patents 'Switch-on-a-Card' and MetaSwitch Debuts Class 5 Switch). So far, though, Sentito claims its SIP capabilities aren't matched by these players.

Sentito also is a startup, which makes its foray into ILEC-land more risky. As the downturn continues, a range of carriers have resisted going with vendors that haven't proven themselves in at least one major deployment. While the Telus alliance should help this perception, Sentito remains an unknown quantity.

It won't be an easy battle, but if preparation means anything, Sentito's got its bases covered. Besides the Telus link and new funding, the vendor says Osmine certification, a prerequisite for dealing with the U.S. RBOCs, is due later this month. Later this year Sentito hopes to add MPLS and VPN capabilities to its wares.

So far, Sentito's in five trials with major carriers worldwide, two with North American RBOCs, Flanagan says.

Interestingly, Sentito seems unconcerned about what appears to be a major obstacle in its path -- Nortel, which is also a Telus supplier. Indeed, Flanagan says he foresees a future in which Sentito and Nortel work happily together in the Telus environment, perhaps leading to other partnerships.

Telus seems to agree: Alan Strachan, director of technology assessment at Telus Ventures, who's also just joined Sentito's board, says Sentito's solution is more focused at the edge than Nortel's. The two products should be complementary, he notes -- provided Nortel supports development of further product synergies. (Given Telus's clout in Canada, that seems unlikely to be an issue.)

Besides Telus, another new contributor, Core Capital Partners, joined existing investors Inflection Point Ventures, Kodiak Venture Partners, Mid-Atlantic Venture Funds, and Technology Venture Partners LP to bring Sentito's total funding to $25 million.

— Mary Jander, Senior Editor, Light Reading

xyz 12/5/2012 | 12:30:25 AM
re: Sentito Networks Scores $14M There's $14M you'll never see again !!

How do you spell "god box". Even the VP of Marketing says it "replaces a whole bunch of things".

How many companies have to get funded and fail before the obvious becomes obvious.........
mu-law 12/5/2012 | 12:30:25 AM
re: Sentito Networks Scores $14M "Sentito says it reaches deeper into the access network than these vendors, providing SIP...links between individual T1/E1 TDM, dialup, and DSL lines"

Is that what this box is really supposed to do? I don't know I've ever met a single ILEC (including a big one in W Canada) that has a motivation to move highly commoditized fully depreciated access infrastructure (with a shrinking line count) to SIP transport for its own sake. What problem does this solve?

mu
OptixCal 12/5/2012 | 12:30:24 AM
re: Sentito Networks Scores $14M Boy,
All these startups, getting all this funding in an economically depressed telecom market that's touting "new" innovations when no one's buying the legacy stuff? Dam! If there's some VC money out there for a struggling sub-systems maker, gimme a call!
rbkoontz 12/5/2012 | 12:30:20 AM
re: Sentito Networks Scores $14M This product was an interesting idea 2 years ago when the telco world was aggressively talking about building packet networks. To do this product right, is thousands of R&D staff years. Unfortunatley, all those days are gone, baby.

The future of this gig is a few years in ILECs lab experiments so the lab rats can say "that's really neat" but no chance of real deployment. Perhaps they may convince a few small telcos to take part in a press release then let it screw up their networks beyond recognition.

This management team has absolutely no business screwing investors again. Last time they developed a similar box of rocks at Salix which they (fortunately or brilliantly?) sold right at the peak of the telecom bubble to the brilliant acquisition crew at Tellabs for hundreds of millions. Not too long after the acquisition, Tellabs realized their mistake and shut the whole thing down.

Good luck gents. Keep us posted on revenus...
grapsfan 12/5/2012 | 12:30:15 AM
re: Sentito Networks Scores $14M ...from an article full of funny quotes projecting that service providers really need something that does everything under the sun at a switching level....

"Flanagan claims one Asian customer was able to consolidate 50 central offices to 15 or 20 by deploying the Sentito solution."


But they never claim an actual deployed customer...just five lab trials. In other words, for this Asian customer, they could draw up a bunch of boxes on a white board and then erase some of them. Whoo-f'n-hoo. If you're making up numbers about node & footprint consolidation, at least be as aggressive as other startups who make up numbers and say "95%", not "60%".

If I was an investor in any of the companies who gave these guys $14M, I'd be finding a mattress for my money. Quick.
a-dude 12/5/2012 | 12:29:53 AM
re: Sentito Networks Scores $14M that atleast some companies are getting funded... Whether their ideas are ultimately going to succeed or not is anybodies guess... but wish them the best...
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