World Wide Packets out of the Woods
World Wide Packets Inc. has got something to crow about at last. The Ethernet equipment startup has won three potentially large contracts in Europe, Light Reading has learned.
It also appears to be in good shape on the financial front. "We've got the bridge financing in place that gives us nine to ten months," says Dave Curry, the company's CEO. "I'm in the process of raising the balance of the last round," he adds, noting that this should see World Wide Packets through to profitability.
Light Reading stumbled on World Wide Packets' secret success story when talking to one of its European customers, Telewest Communications Networks plc (Nasdaq: TWSTY). The U.K. cable operator has a nationwide fiber backbone and already gets about 20 percent of its revenues from offering voice and data services to corporate customers.
Telewest has been evaluating World Wide Packet's equipment for more than a year and is about to launch a trial Ethernet service based on it, in the city of Bristol. If all goes well, TeleWest's unnamed trial customer will use the service at "hundreds" of sites throughout the U.K., according to Mike Piggott, head of data Internet products.
This is "an order of magnitude greater in terms of upside potential" than any of World Wide Packets' U.S. projects, according to Curry.
Piggott says another major U.K. cable operator, NTL Inc. (Nasdaq Europe: NTLI), is rolling out a similarly sized scheme using World Wide Packet equipment, on about the same timescale.
Piggott also let slip that a further major European project, with Netherlands incumbent, KPN Telecom NV (NYSE: KPN), has been won by World Wide Packets. Curry says this could result in his company's equipment being deployed in "dozens and dozens and dozens" of Dutch municipalities. He points out, however, that all three European projects are covered by frame contracts where the eventual size of the order isn't guaranteed.
Curry says KPN is one of the first incumbents to work with local governments to deploy active Ethernet technology in a way that taps low-cost financing (municipal bonds) for infrastructure projects. "Rather than fight it, KPN is embracing it," unlike other incumbent carriers, he says, noting that KPN has rejected the idea of deploying passive optical networks.
Piggott says TeleWest was very impressed with World Wide Packets' operations support system (OSS) which covers inventory management, as well as everything from order entry to provisioning, and has been designed to integrate easily with existing systems.
"We've put significant investment into the OSS," says Curry, who previously founded an OSS company, Architel, that was sold to Nortel Networks Corp. (NYSE/Toronto: NT) in July 2000. As it happens, carriers at a recent Light Reading Live event identified OSS as the biggest weakness of most Ethernet equipment (see Carriers Face Ethernet 'Black Hole').
Piggott also cites low cost and fast restoration times (a special version of the spanning tree algorithm reroutes traffic around failures in 100 milliseconds) as other reasons why Telewest went with World Wide Packets. Other bidders included Atrica Inc., Cisco Systems Inc. (Nasdaq: CSCO), Foundry Networks Inc. (Nasdaq: FDRY), and Nortel, he says.
All of this appears to mark the end of a grim period for World Wide Packets. It started with speculation that it was running out of money and was up for sale (see Is World Wide Packets up for Sale?). Since then, it's undergone four rounds of layoffs, bringing its staff count down from a maximum of 230 to a mere 63.
"It's been tough going but we're still here," says Curry, who expects revenue for this year to be "pretty close to eight figures."
— Peter Heywood, Founding Editor, Light Reading