Wednesday, May 24, 2017

Sonus and GENBAND to merge to create company with $680m annual revenue

Sonus Networks, a provider of solutions that enable secure and intelligent cloud communications, and GENBAND, a supplier of carrier and enterprise network transformation and real-time communications solutions, announced a definitive agreement under which the two companies will combine to create a major next-generation communications networking company.

Under the terms of the agreement, Sonus and GENBAND shareholders will each own approximately 50% of the combined entity. Based on the closing price of Sonus' common stock on May 22nd of $7.79 and estimated net cash at the time of closing, the transaction values the combined company at an enterprise value of approximately $745 million.

On closing, Sonus and GENBAND will combine into a newly formed holding company. Each Sonus shareholder will receive one share of common stock in the combined company for each existing Sonus share held; the new company will issue approximately 50 million shares to GENBAND's equity owners, plus $22.5 million in the form of an unsecured note. The combined company will have an estimated net cash position of $40 to $45 million.

The transaction will combine Sonus' established software-based real-time communication virtualisation, cloud-based SIP and 4G/VoLTE and security solutions with GENBAND's network modernisation, unified communications and mobility and embedded communications solutions. Together, Sonus and GENBAND will be better positioned to enable the transformation to IP and cloud-based networks for service providers and enterprise customers.

The combined company will have a global sales footprint in 27 countries, a customer base that includes may Tier 1 carriers, with 67% of combined 2016 revenue for the two companies generated in the U.S. and Canada, 18% in EMEA, 11% in APAC and 4% in CALA.

The two companies' combined revenue and EBITDA in 2016 would have been approximately $680 million and $50 million, respectively, excluding synergies. The transaction is expected to be significantly accretive to Sonus' earnings per share in 2018. The combined company expects to realise annual cost synergies of $40 to $50 million by the end of 2018.

The CEO of the combined company will be Raymond Dolan, current president and CEO of Sonus; David Walsh, current CEO and chairman of GENBAND, will oversee the Kandy business, GENBAND's cloud communications platform as a service (CPaaS). Daryl Raiford, current CFO of GENBAND, will serve as CFO of the combined company. The board of directors of the combined company will comprise five representatives designated by GENBAND and four representatives designated by Sonus.

The transaction has been unanimously approved by the boards of both companies, and is expected to close in the second half of 2017, subject to Sonus and GENBAND shareholder approval, listing of the combined company's common stock on Nasdaq and other customary closing conditions.

Calix demos 40G with NG-PON2 channel bonding

Calix announced what it claims is a fibre access technology first leveraging its AXOS software-defined access (SDA) platform with the demonstration of bonding of multiple channels or wavelengths of NG-PON2 technology over fibre.

Employing technology compatible with ITU standards, Calix has demonstrated the ability of the AXOS E9-2 Intelligent Edge System to leverage NG-PON2 channel bonding to deliver bandwidth of up to 40 Gbit/s, or 80 Gbit/s aggregate bandwidth, over a single fibre.

This capability can enable service providers that are deploying channel-bonded Calix AXOS NG-PON2 solutions with greater flexibility to address, over a single fibre with adjustable capacity, the emerging bandwidth requirements of demanding service types including: 5G mobile backhaul; high-end business services; high-density residential services, including in MDU environments; and transport and middle mile requirements.

Calix noted that the multi-wavelength capability offered by NG-PON2 technology allows service providers to accelerate network convergence and significantly increase the available bandwidth capacity. However, the ability to bond NG-PON2 wavelengths takes this capability to a new level and can enable service providers to upgrade their networks more quickly and efficiently.

Developed leveraging the Calix AXOS platform, Calix stated that the NG-PON2 channel bonding functionality emerged from a Verizon request that resulted in a live demonstration within 12 days. The speed of the development utilised the hardware abstracted Calix AXOS platform that is designed to enable rapid development of new capabilities, such as channel bonding. The AXOS platform also provides support for anyPHY and anyPON technologies, such as NG-PON2, as they emerge.

Regarding the demonstration, Vincent O’Byrne, director of access technology at Verizon, said, "… Verizon has championed channel bonding within the standards as an option to support higher capacities… I believe channel bonding holds the potential to more than double the bandwidth to individual subscribers or network locations and anticipate it could be a means of moving from 10 to 20 Gbit/s and beyond without deploying new technologies".

Altice to rollout single brand worldwide by mid-'18

Altice NV has unveiled a new unified global strategy, marking the next step in the group's strategy to strengthen its industrial and operational platform and building on its transformation into a trans-Atlantic telecoms, content and advertising company serving more than 50 million customers around the world after the acquisitions of Cablevision and Suddenlink in the U.S. last year.

As part of this transformation, Altice is announcing its new global and multi-local branding strategy, unifying its assets and brands worldwide. The move is intended to unite and strengthen Altice's businesses, which will share a common telecoms-content-advertising strategy and execution model.

The Altice name, brand and new logo will replace the current brands at each of Altice's operating companies globally, and it is expected that all commercial brands will have transitioned by the end of the second quarter of 2018.

Under the initiative, Altice's B2B brands will transition to Altice Business, while telecoms sub-brands in select areas will not change, specifically: Red in France; Moche, Uzo and Sapo in Portugal; Next TV in Israel; the media news brands; press brands of SFR Presse and Teads.

Founded in 2001 by Patrick Drahi, Altice is a convergent telecom, content, media, entertainment and advertising company. The company has a presence in 10 territories including France, Portugal, Israel, the U.S., and the Dominican Republic.

Altice USA, a top-four U.S. cable operator, is a major broadband communications and video services providers, delivering broadband, pay TV, telephony services, WiFi hotspot access, content and advertising services to approximately 4.9 million residential and business customers across 21 states, currently via the Optimum, Lightpath and Suddenlink brands.

  • In April 2017, Altice   announced that Altice USA had filed a registration statement with the U.S. SEC for a proposed initial public offering of shares of Class A common stock.

Fastly, provider of edge cloud solutions, raises $50m in Series E funding

Fastly based in San Francisco, the edge cloud platform:

a.         Founded in 2011 by Artur Bergman, current CEO of Fastly.

b.         Developer of an edge cloud platform designed to enable secure and scalable delivery of digital services.

c.         Which has raised total funding of approximately $129 million in four rounds from investors including Iconiq Capital, Amplify Partners, August Capital, O'Reilly AlphaTech Ventures OATV, Battery Ventures and IDG Ventures.

Announced it has raised $50 million in new funding in a Series E round led by Sorenson Capital, with participation from additional new investor Sapphire Ventures and existing investors Iconiq Capital, Amplify Partners, August Capital, O'Reilly AlphaTech Ventures OATV and IDG Ventures. The company stated that including this latest round it has raised a total of approximately $180 million to date.

Fastly stated that since the introduction of its edge cloud platform, the company has achieved more than 100% annualised revenue growth over the last two quarters and is approaching breakeven based on an annualised run rate of $100 million. Fastly cited customers including online destinations such as The New York Times, Airbnb, Spotify, Pinterest and Ticketmaster.

Fastly's edge cloud platform provides a suite of application delivery, video and streaming, and cloud security solutions, including the recently-announced Image Optimizer, Load Balancer and Web Application Firewall (WAF), which were launched in April this year.

In October 2016, Fastly introduced its Managed CDN solution, designed to provide businesses with custom CDN solutions that meet individual customer requirements. The Managed CDN offering combines a customer’s existing network infrastructure with Fastly's content delivery platform.

Municipality of Arvada deploys Siklu radios to enable 1 Gbit/s connectivity

Siklu, a specialist supplier of millimetre-wave radios, announced it has provided high capacity wireless links supporting up to gigabit bandwidth for the city of Arvada in Colorado within the Denver-Aurora-Lakewood metro area.

The Siklu wireless links, deployed by system integrator Netunwired, provide municipal facilities in Arvada with connectivity at up to 1 Gbit/s, and help to eliminate leased line expenses.

Siklu explained that in 2016 a range of municipal facilities including the Arvada police were serviced by a central DS3 leased circuit, split into T1 lines, providing each site with throughput of 1.5 Mbit/s. While the facilities required more bandwidth, the city IT department was unable to implement a uniform network policy or introduce a virtualised server network.

Arvada required a solution able to deliver fibre-like bandwidth, but without the up front installation costs associated with fibre deployment. Therefore the municipality approached wireless system integrator Netunwired, specifying its requirement for a full duplex gigabit service offering reliability suitable for carrying mission critical municipal services.

Netunwired proposed deploying Siklu's EtherHaul millimetre-wave (mmWave) radios and installed a mix of EtherHaul radios designed to provide 99.99% reliability and 1,000 Mbit/s full duplex throughput over the air. In addition, for two longer wireless links it added Siklu's Overbuild long range protocol, which enables mmWave connections to perform close to 100% reliability over a distance of several miles.

Siklu noted that Netunwired completed the bulk of the project within three weeks of its initiation by the city, enabling higher bandwidth connections and enhanced productivity as well as a more robust IT infrastructure.

  • Earlier in the year, Siklu announced its 70 GHz radios had been deployed to deliver gigabit throughput on Ikei Island in Okinawa, Japan, specifically enabling a high-speed link to a computer graphics school over 1.9 km of open water. The link was provided by GLBB, a major ISP in Japan.

Cisco survey finds nearly 75% of IoT projects fail to meet objectives

Cisco has released the findings of its survey evaluating Internet of Things (IoT) projects worldwide at the annual IoT World Forum (IoTWF) event in London.

Cisco noted that IDC predicts the installed base of IoT endpoints will rise from 14.9 billion at the end of 2016 to over 82 billion in 2025, but finds in its survey that 60% of IoT initiatives stall at the proof of concept (PoC) stage and only 26% of companies consider IoT initiative to have been a complete success.

For the study, designed to assess the success of, and challenges faced, in implementing IoT initiatives, Cisco surveyed 1,845 IT and business decision-makers in the U.S., UK and India in a range of industries spanning manufacturing, local government, retail/hospitality/sports, energy, transportation and health care. Respondents were from organisations engaged in implementing or that have completed IoT initiatives. Key findings of the survey are outlined below.

The human factor

Cisco finds that while IoT may seem to be about technology, human factors such as culture, organisation and leadership are critical, with three of the four top factors behind successful IoT projects linked to people and relationships. Specifically, it found that collaboration between IT and the business side was the top success factor, cited by 54% of respondents, while a technology-focused culture, based on top-down leadership and executive sponsorship, cited as key by 49% of respondents. In addition, IoT expertise was selected as key by 48% of respondents.

The survey also highlighted that organisations with the most successful IoT initiatives worked with ecosystem partners at each phase of projects, from strategic planning to data analytics after rollout.

Cisco notes that IT decision-makers are more likely to rate IoT initiatives as successful, with 35% of IT decision-makers calling IoT initiatives a 'complete success', but only 15% of business decision-makers of the same view.

Partner for success

Cisco finds that 60% of respondents stressed that IoT initiatives prove far more difficult than expected, with the top 5 challenges cited as time to completion, limited internal expertise, quality of data, integration across teams, and budget overruns. It was found that successful organisations work with the IoT ecosystem at each stage of projects.

Leveraging smart-data insights

Cisco reports that 73% of participants use data from completed IoT projects to improve their business. Globally, the top 3 benefits of IoT include improved customer satisfaction (70%), operational efficiencies (67%) and improved product/service quality (66%). In addition, improved profitability was found to be the leading unexpected benefit (39%).

Learn from the failures

Finally, Cisco finds that IoT projects also resulted in a further unexpected benefit, with 64% of respondents agreeing that experience gained from stalled or failed IoT initiatives helped to accelerate the organisation's investment in IoT.

Oscilloquartz unveils synchronisation solution for small cell deployments

Oscilloquartz, an ADVA Optical Networking company, announced the launch of the OSA 5405 SyncReach, an integrated PTP grandmaster and GNSS receiver featuring a patent-pending dual antenna and receiver and designed to support the large-scale roll out of small cells.

The new technology from Oscilloquartz is engineered to provide accurate and affordable phase synchronisation for the growing small cell market and meet the timing requirements of 4.5G and 5G connectivity. Using the OSA 5405, operators can migrate from legacy GNSS RF antennas and cables to standard copper and fibre Ethernet cabling, allowing reduced capex and opex.

Available in both indoor and outdoor variants, the new OSA 5405 is designed to be deployed in the challenging environments, including urban canyons where GPS signals fail. In addition, the OSA 5405's small size also enables it to be positioned on indoor windows to avoid multi-path signal interference from objects within the building.

The compact design and power-over-Ethernet capabilities of the OSA 5405 enable synchronisation at the edge of the mobile network, allowing a significant reduction in complexity and power requirements, as well as lower costs for installation and operation. A further key feature of the new solution is IP connectivity, enabling synchronisation as a part of Internet of Things (IoT) networks.

The OSA 5405 from Oscilloquartz provides precise GNSS-sourced synchronisation, supported by network-based SyncE and PTP backups. Additionally, in high-rise buildings it can also deliver synchronisation recovered from the GNSS smart receiver over fibre.

The solution is designed to be combined with the ADVA FSP Network Manager with Syncjack assurance to allow efficient operation. In addition, the OSA 5405 uses a dual GNSS antenna and receiver algorithm designed to mitigate interference from multi-path signals that can affect accuracy, particularly in urban canyons.

Finally, a big acquisition happens in SD-WAN

One thing Silicon Valley is known for is the frantic pace of mergers and acquisitions. Cisco's recent agreement to pay $610 million for Viptela, a start-up based in San Jose, is a big sigh of relief for the many innovators and investors who have been patiently advocating a new generation of software-defined wide area network (SD-WAN) technologies for the past five years. The deal was not unexpected and one could reasonably ask, why did it take so long?

While Viptela was not an Insieme-style Cisco spin-in, the company certainly has a Cisco pedigree. Viptela was founded in 2012 by Khalid Raza, a former Distinguished Engineer at Cisco and widely regarded as a visionary in routing protocols, and Amir Khan, who had previously led the enterprise routing business and product management for MX and M series routers at Juniper. Before Juniper, Khan served as director of product management at Cisco. It is worth noting that Raza holds patents in Border Gateway Protocol (BGP) and Open Shortest Path First (OSPF). Additional founders include Atif Khan, Venu Hemige and Ramesh Prabagaran.

Interestingly, earlier this year Viptela named Praveen Akkiraju as its new CEO, replacing Amir Khan, who continued as president and board member. Akkiraju previously was CEO of VCE for the past four years, where he led the converged infrastructure provider to the No.1 market share position. Prior to VCE, he spent more than 19 years at Cisco, including lastly as SVP and GM of Cisco's Enterprise Networking group. So clearly the Viptela team will fit in well to the Cisco culture.

In May 2016, Viptela raised $75 million in its Series C, bringing total funding to nearly $110 million. The round was led by Redline Capital with participation from new investor Northgate Capital and existing investor Sequoia Capital. Proceeds from this final funding round was intended to scale sales, marketing, technical support and R&D. At the time, the company cited deployments by more than 25 Fortune 500 enterprises as well as licensing partnerships with Tier-1 carriers Verizon and Singtel.

Even with this $610 million transaction, the venture sharks may not be fully satisfied. The price should yield a 5x or better return on their investment, but it is not the billion-plus level of mergers seen in the past, back in the days when all a start-up really had to do was prove that its unique mousetrap was being deployed by a top-tier customer such as Verizon. From the seller’s perspective, some analysts have said the last funding round implied a valuation that would put Viptela in the billion-dollar unicorn club; from the buyer's perspective, Viptela appears to be in the early stages of real, recurring customer revenue generation. There are also numerous other SD-WAN start-ups looking for a buyer, and Cisco was an equity investor in VeloCloud, a direct Viptela competitor also located in Silicon Valley.

What is driving SD-WAN

The traditional enterprise WAN market brings in approximately $45 billion per year worldwide for VPN and MPLS connectivity but has not really changed for years in terms of its service portfolio, making it ripe for innovative disruption. Hence, the venture capitalists became interested in start-ups promising a soft-defined connectivity solution that can be delivered at lower-cost than MPLS and without requiring expensive infrastructure investments up front. A lot of venture funding has flowed to these start-ups for the following good reasons:

  • Businesses have an unsatisfied need WANs at a reasonable cost.
  • The emergence of cloud services means more data is going off-premises.
  • The belief that software rules.
  • The belief that the era of fixed configuration hardware appliances.
The following is a list of pure-play SD-WAN start-ups still on the market:

1.  Aryaka (Milpitas, California)

2.  Cato Networks (Tel Aviv)

3.  CloudGenix (Santa Clara, California)

4.  Cradlepoint (Boise, Idaho)

5.  Cybera (Franklin, Tennessee)

6.  Fat Pipe (Salt Lake City)

7.  Glue Networks (Sacramento, California)

8.  Mushroom Networks (San Diego)

9.  Silver Peak (Santa Clara)

10.  Talari (San Jose)

11.  Velocloud (Mountain View, California)

12.  Versa Networks (Santa Clara)

13.  Webscale Networks (Mountain View, California

Established network hardware vendors also offer SD-WAN solutions. Even if they did not originally use the term SD-WAN, many are doing so today. Prior to the Viptela announcement, Cisco already had its iWAN network overlay solution for enterprises and service providers, and its Meraki group also offers a cloud-based WLAN management that could also be considered a software-defined network management service.

Then there is Riverbed, which is normally thought of as the original WAN optimisation company. This strategic position fits in well with SD-WAN. In 2016, Riverbed acquired Ocedo Networks, a developer of SD-WAN technologies based in Karlsruhe, Germany.  Riverbed had been using Ocedo to power its Project Tiger initiative of application-centric SD-WAN solutions designed to eliminate the need for traditional branch routers. Last month Riverbed agreed to acquire Xirrus, a leading supplier of enterprise and service provider WiFi solutions. The combination of these two newly acquired companies, along with its link optimisation technology, should make Riverbed a potent player in this space.

Many can play this game

Network aggregation technologies have been around for a long time. While independent service providers have become quite successful at aggregating access lines from multiple carriers into a software-driven WAN as a service. Global Capacity is a good example. Since 2000, this carrier based near Boston has been building virtual networks for enterprises. Its One Marketplace hub aggregates the access and pricing information for broadband telecommunications services, including MPLS VPN, Ethernet over copper and DSL. In 2014, Global Capacity acquired MegaPath’s network services business unit which include the Covad DSL assets.

A similar company is Virtela, which NTT Communications acquired in 2014. The Virtela proposition was also simple: enable the enterprise customer to build a virtual overlay network from multi-carrier MPLS, Ethernet, DSL, 3G/4G/LTE and other IP links, while benefiting from a single SLA and management portal. Virtela operates global operations and delivery centres in the U.S., India and the Philippines.

In addition, at least two major service providers (AT&T and Orange) are building their own SD-WAN solution rather than buying a solution from one of the start-ups or an established vendor. So the question of which technology provider will dominate the SD-WAN segment is still in the open.

Concluding thoughts

Now that Viptela is off the field of potential acquisition targets, will it be easier or harder for the remaining start-ups to find a suitable dance partner? In the past, whenever Cisco bought a start-up in a particular category one could expect Juniper, Ericsson or Alcatel-Lucent to do the same. But this dynamic has not been seen for several years.

One could still imagine Juniper buying up Versa Networks or HPE making a bid for Velocloud or Webscale Networks; and Ericsson might find a new focus and liking to this segment. The most likely buyers, in OND's opinion, would be the giant cloud companies, especially AWS, Microsoft and Google. These companies clearly benefit when new railroads are built to bring traffic into their domains. As cloud providers, they are already delivering the infrastructure for running the controllers used by these SD-WAN start-ups. Managing their own SD-WAN could also provide a cloud company with a competitive advantage and a new billing opportunity. Even for smaller companies looking to provide secure Office suite software to multiple branch offices, why not buy an integrated WAN connectivity directly from Microsoft? So the question is what are they waiting for?