Telica Scores First Deal

Telica Inc., a developer of multiservice data and voice switching systems, announced today that BTI (proposed Nasdaq: BTIX) has installed several of its Plexus 9000 broadband switches in BTI's facilities-based network.

Products have already been shipped and installed in four cities. BTI, which is Telica's first customer, expects to continue rolling out equipment over the next two years to the remaining 24 cities in its network, which stretches from New York to Florida.

BTI, a competitive local exchange carrier (CLEC) that offers integrated voice and data services, started testing Telica gear in July. Telica has already begun realizing revenue from equipment deployed in at least one BTI location. Specific financial details about the contract haven’t been disclosed, but Telica officials say it is a multimillion dollar deal.

Four more customers are currently testing Telica’s gear, and one more is also generating revenue. A third customer is expected to begin generating revenue this quarter, says Ali Kafel, VP of marketing for Telica.

“One thing we have learned from our competitors is that you don’t announce a deal too early,” says Kafel. “We are waiting to announce customers when they start generating revenue. Too many times deals have been announced and then the equipment is returned. We didn’t want to do that.”

The Plexus 9000 combines the functionality of a softswitch with a Class 5 voice switch. BTI plans to use the Plexus 9000 to provide voice and data services over digital subscriber line (DSL).

What makes Telica’s solution different from its competitors’ products is that it can be deployed either as an integrated or a distributed switch, claims Kafel. For example, it has the capability to incorporate signaling functionality and call control into one box. Tachion Networks does something similar, he says.

But it can also be deployed as a distributed switch like ones from Convergent Networks Inc. or Sonus Networks Inc. (Nasdaq: SONS). This means that if a provider already has a Class 5 switch or a media gateway, the Telica switch can be deployed along with the existing equipment and provide only the functions that are needed, adds Kafel.

With competitors like Sonus hitting it big in the initial public offering market and others like Convergent already having filed for IPOs, Telica is clearly headed along the same path (see Convergent Heads for IPO and Sonus Raises $115 Million in IPO). The company raised $50 million in its second round of funding back in May 2000, with Oak Investment Partners leading the round and Prism Venture Partners, Highland Capital Partners, Bessemer Venture Partners, and Nassau Capital also contributing. That brought the total to $56.5 million in venture funding. The company has also received financial backing from Redback Networks Inc. (Nasdaq: RBAK).

"We are building the company to go public,” says Kafel. “If things continue to go well, and I expect they will, we’ll probably do it sometime next year."

But Telica may need to start announcing some incumbent carriers as customers, too. BTI filed for an IPO over a year ago, but still hasn't priced its shares, raising questions about its viability. Although he wouldn't say who it is, Kafel says that one of the four remaining unnamed customers is a major incumbent carrier.

-- Marguerite Reardon, senior editor, Light Reading, http://www.lightreading.com

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