NexTone Dials Up $35M More

NexTone Communications Inc. has scored another $35 million in funding, largely because of its vision that session border controllers (SBCs) will eventually become a critical component in carrier IMS (Internet Multimedia Subsystem) networks. (See NexTone Touts Q3.)

The new round is led by One Equity Partners (OEP), a private equity affiliate of J.P. Morgan Chase & Co., with existing investors BCE Capital, Core Capital Partners, Mid-Atlantic Venture Funds, and Safeguard Scientifics also contributing. The new funding brings NexTone’s total to $67.5 million.

“With this fuel, and if we keep going at the pace we’re going now, we could hit cashflow breakeven in the next 12 to 15 months," says NexTone CEO Malik Khan. “I think there is an even chance of growing faster than that; if that happens we may be looking at more funding.” Khan says NexTone employs around 180 today, and will hire another 100 in the next nine months.

When asked about the possibility of an IPO in coming quarters, Khan said: “I haven’t really made up my mind on that.”

NexTone has convinced its investors that it can “marry the VOIP world with the IMS world.” (See IMS Guide.) This means that it's integrating much of the call session control functionality (CSCF) -- taken straight from the IMS playbook -- into its SBC, so that intelligence can reside at the network's edge.

NexTone believes there is a clear advantage in that. Many sessions that originate and terminate at end points proximate with the same SBC can be completed locally, never being routed back to the network core. This, NexTone argues, gives carriers better QOS and network performance.

“One of the things we are seeing in network architecture is a net increase in the amount of intelligence at the edge of the network,” Khan says. “We are seeing a much broader set of requirements -- more than just security.”

So, rather than being a device that some believe will eventually be subsumed by a router or switch, the NexTone SBC becomes an integral part of networks migrating toward IMS. In fact, NexTone doesn't even call its device a "session border controller" anymore, preferring "session controller" instead. (See NexTone Gets Khan and Session Controllers: Limited Lifespan?)

“NexTone advocates call session control function (CSCF)-capable SBCs at the network edge and real-time session managers in the network core, so as to more tightly couple control-layer and transport-layer (MPLS) functionality," says Heavy Reading analyst Graham Finnie in his report, "IMS and the Future of Network Convergence."

NexTone VP of marketing Dan Dearing says the company's approach gives network operators the ability to manage quality of service throughout the life of a session. This, he believes, gives NexTone a crucial edge over its competition. (See Session Controllers Are Going Places.)

One of NexTone’s marquee customers is KPN Telecom NV (NYSE: KPN), and the company says it has more than 370 carrier and enterprise customers worldwide, including Tier 1 carriers in Latin America, Europe, Asia, and North America. (See NexTone Names Japanese Partner and NexTone Wins KPN Deal.)

— Mark Sullivan, Reporter, Light Reading