Optical/IP Networks

XConnect Raises $12M More

VOIP peering and ENUM specialist XConnect Global Networks Ltd. says it received $12 million in Series A venture capital funding this week, a sign that VCs still see IP communications as a huge growth market. (See XConnect Raises $12M.)

The service provider, which offers neutral and trusted peering and Electronic Numbering (ENUM) registry services, said its funding was led by Accel Partners and Venrock Associates of the U.S., with Germany's Grazia Equity and Japan's Bridge Capital.

XConnect says it will use the funds to accelerate product development and expand its infrastructure and points of presence across the globe. XConnect CEO Eli Katz says the company could also use that cash to look at acquisitions.

"It is of benefit to our customers to have the widest service available," Katz says. "We'll be using organic growth, while also looking into alternatives, such as more acquisitions," although he concedes that in the IP peering space "there's not that much left out there."

XConnect was founded in 2004 and has grown rapidly since then, in part due to its acquisition strategy. In 2006, it made two acquisitions -- the purchases of e164.info and IPeerX Inc. -- to help expand its customer list and ENUM registry. (See Xconnect to Buy e164.info and XConnect Takes Out Pulver's IPeerX.)

The company now has more than 400 customers in 35 countries, and counts one of the largest ENUM registries in the world -- if not the largest. According to a spokesman, XConnect has about 200 million telephone numbers in its ENUM registry, of which approximately 8 million are "pure VOIP routable numbers."

XConnect and other VOIP peering providers aim to alleviate the problem of managing thousands of interconnection agreements between VOIP service providers and end users, thereby lowering connection costs. By establishing direct routes between peers, VOIP peering providers also ensure that IP-based functionality isn't lost by connecting calls through the legacy phone networks.

"VOIP penetration is increasing in countries around the globe. The U.S. is about 6 percent to 7 percent, but there are some countries where penetration is in the double digits," Katz notes. "The train has left the station and is rapidly gaining speed."

— Ryan Lawler, Reporter, Light Reading

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