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AePona Raises $10M, Wins Telus

Service delivery platform (SDP) vendor Aepona Ltd. has pocketed another $10 million in funding and won another significant carrier deal as it continues to grow in size and stature as a converged services specialist.

The startup, which already boasts multiple carrier customers, has just beaten out major IT firms such as HP Inc. (NYSE: HPQ) and BEA Systems Inc. (Nasdaq: BEAS) to provide Telus Corp. (NYSE: TU; Toronto: T) with Web services capabilities, one of the functions of AePona's Universal Service Platform (USP). (See Aepona Develops Apps.).

Telus is using the Web services capabilities, inherent in AePona's Parlay-X service gateway (formerly branded the Causeway gateway), to open up its network to third-party application developers. Those developers can then build service capabilities that will run across the carrier's fixed and mobile networks, explains AePona's VP of marketing, Michael Crossey. (See AePona Gives Causeway News and AePona Supports Parlay X.)

Isaac Olasoko, AePona's CEO, says the Telus engagement is just one of a number of new wins that will push the vendor's revenues above $30 million this year, nearly all of which has been generated by direct sales.

Olasoko says a contract with "an even bigger carrier in the U.S. will be announced this quarter," while another major carrier deal, this time in Asia/Pacific, is also in the news pipeline.

AePona's existing customers include Orange SA (London/Paris: OGE), Sprint Corp. (NYSE: S), KPN Telecom NV (NYSE: KPN), VimpelCom Ltd. (NYSE: VIP), and eir . (See VimpelCom Selects Aepona .)

These new wins, in addition to a new strategy focused on telecom applications development, means AePona has been growing its team rapidly. It now has 137 on staff, including a handful in a new development center in Kiev, Ukraine, and will hit the 200-employee mark during the next two years, says the CEO.

And that level of expansion needs funding, so the company today announced a new £5 million (US$9.8 million) cash round that takes its total raised to around $42 million. The new money comes from existing investors, including Amadeus Capital Partners Ltd. , Polaris Venture Partners , and Trinity Ventures .

But AePona isn't profitable yet. The cost of supporting new customers, and developing new applications that run on top of the USP service delivery platform, means it will be mid-2008 before the company hits positive cashflow.

Olasako, though, says the investment in applications development is paying off, with existing carrier customers providing valuable feedback on what services are needed and how they should work. The company is showing off one of those applications, a standards-based mobile-to-WiFi call handover and continuity function, at next week's 3GSM show in Barcelona.

The ability to roam between mobile networks and WiFi hotspots -- an early example of a fixed/mobile convergence service -- is already made possible by various dualmode technologies, including UMA (Unlicensed Mobile Access) technology. Carriers such as Orange, T-Mobile International AG , Telecom Italia (TIM) , and BT Group plc (NYSE: BT; London: BTA) have already launched services that enable their subscribers to roam between mobile networks and 802.11-based access points in their homes and workplaces, which then route their calls cheaply across fixed broadband connections. Vodafone Germany recently announced it now has 2 million subscribers to its Zuhause service. (See Vodafone Tops 200M, Talks M&A, BT Touts Fusion WiFi, and Orange Launches Unik.)

But many of the deployed technologies have handover and other service issues, especially when it comes to supporting call-related services and enabling uninterrupted two-way handover between WiFi points and mobile operator base stations. There are also question marks about compliance with IP Multimedia Subsystem (IMS) standards.

The 3GPP's Voice Call Continuity (VCC) standard addresses those issues, and is now being supported and made into products by a number of vendors, including AePona, as a key early IMS application. (See Huawei, E28 Team Upand Nortel Enhances IMS.)

While AePona will be showing off its VCC application in Barcelona, it will be later in 2007 before a commercial product is available and trials take place, and 2008 before any commercial deployments are in place.

Olasako realizes there's plenty of competition in delivering VCC capabilities, but believes AePona's development, based on customer feedback, will have the edge over those from the IMS-focused equipment vendors like Huawei Technologies Co. Ltd. , Nortel Networks Ltd. , Siemens Communications Group , Alcatel-Lucent (NYSE: ALU), BridgePort Networks Inc. , and Outsmart Ltd.

"It's not just about call continuity, though of course that's non-trivial, but it's only about 25 percent of the challenge. There are a lot of networking issues surrounding call handover that need to be considered so that services such as call waiting and VPN capabilities are carried over as the subscriber roams between the different networks," says the CEO.

"You also need a lot of in-built intelligence to handle the billing management. For example, you need to ensure that the network doesn't bill the subscriber for a new call setup each time they roam out of the WiFi cell and onto the mobile cell."

That level of intelligence also requires the mobile operator involved in the roaming service to have a real-time billing platform. "It's likely that the introduction of such services will drive uptake for real-time billing platforms," adds Olasako, "and it's likely we'll strike some kind of relationship with a vendor that can provide such a system."

— Ray Le Maistre, International News Editor, Light Reading

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