NexTone Raises $25 Million

NexTone Communications has received a $25 million investment from Columbia Partners Private Capital, the private investment group of Columbia Partners LLC, a Washington, D.C.-based investment management group.

This investment brings NexTone's total private funding to date to $92.5 million. Earlier venture investors in NexTone include One Equity Partners (OEP), BCE Capital, Core Capital, Mid-Atlantic Venture Funds, and Safeguard Scientifics.

NexTone is considered a leader in the session border controller area. The company reports that it has achieved record bookings in 2006 for its IntelliConnect

System, a suite of intelligent session management and interconnect products designed for VoIP and IMS service providers. According to NexTone, its customers currently carry more than 50 percent of the world's international VoIP traffic.

The leader in the session border controller space, Acme Packet, this summer filed a registration statement with the SEC relating to a proposed IPO.

Session border controllers are designed to enable VoIP peering between carriers or between carriers and enterprises. Some of a session border controller's functionality can be delivered by other network devices, such as routers and firewalls, prompting speculation that the products will have a short lifecycle as standalone components.

This idea has sparked consolidation in the session border controller space. For example, Netcentrex was acquired in May by Comverse Technology Inc. for approximately $159 million in cash. And Ditech Communications Corp. last year acquired privately held session border controller provider Jasomi Networks.

Still, forecasts for session border controllers are strong. According to Infonetics Research, the session border controller segment is up 29 percent sequentially and 99 percent from the first quarter of 2005. Infonetics expects the session border controller opportunity to grow from $86 million in 2005 to $613 million in 2009.

Dan Dearing, vice president of marketing at NexTone Communications, recently told xchange that as the industry progresses and the session border controller players change, so too will the functionality of the session border controller – whether it be a standalone product or a feature of a larger solution. Dearing believes session border controllers will remain standalone platforms, although he said there are parts of these products – like NATing – that are being subsumed over time by routers. “But if you look at signaling interoperability, signaling interworking, session management that [a session border controller] does, it’s unlikely that a router would subsume that,” said Dearing of NexTone, which this summer told xchange the company aims to be cash-flow-positive in mid-2007.

NexTone Communications www.nextone.com
Acme Packet www.acmepacket.com

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