If you are a subscriber to the free daily email from Scientech, you saw this on July 30:
“Telecom: Utilities Remain In the Loop” – By Ken Silverstein
It begins: “…When some utilities entered the communications loop and began offering fiber-optic services, success was supposed to be a slam-dunk. But the market became saturated with bandwidth capacity and prospects for such achievement became more elusive. In some cases, companies have entirely written off their losses or ceased operations.
But contrary to conventional wisdom, utilities that made cautious investments in fiber optics could turn out to be winners. And while they won’t get satisfactory returns in the short run, the endeavors could pay off over time as the economy rebounds and as consumers demand sophisticated communications offerings that require more bandwidth.”
This recalled to mind a company I’ve been acquainted with for some time that may hold interest for those utilities that stand to benefit from the rebound Ken talks about.
PurOptix, Inc. has developed a unique and proprietary network system they call AON (Advanced Optical Network), that allows utilities, telephone and cable companies to offer a variety of services and content on an all fiber-optic based network. They’ve been making steady progress right through the telecom bust, and are set to install their first trial system later this year. They have just completed the first close of an “A” round, and are currently seeking additional investors.
—- Company Overview (adapted from company materials)
Seeing “Fiber-to-the-Home” as the ultimate network platform, and observing that Telco and CATV networks cannot be adapted support the demand for Internet and other services, PurOptix developed a cost effective all fiber-optic system which surpasses PONs (passive optical) networks based on HFC and “shared” architecture.
The PurOptix AON system provides a platform to deliver traditional telephone, television, and Internet services, and new advanced services like interactive and HDTV, Ultra high-speed Internet, true Video-on-Demand, and highly secure VPNs (Virtual Private Network connections). Applications for PurOptix’ Optical Concentrators and Gateways range from enterprise to residential service delivery. PurOptix is initially targeting leading network operators with existing fiber optic infrastructure in the Utility, Telco, and CATV segments that have aggressive plans to advance their telecommunications business.
The AON System delivers bi-directional information at 155 Mbps and provides extremely secure dedicated connections through its Private Virtual Circuit technology. PurOptix has developed strategic relationships with leading hardware and software vendors including Marconi, SGI, and Sun.
The company has secured a Pilot Network Deployment contract with Batelco, the Bahrain Telecommunications Company and is projecting initial follow-on revenues from this engagement of approximately $2 million this year for engineering services, software licenses, and hardware for initial network installations. The Company is in discussions for a contract for production network deployments with Batelco in later this year with rollouts beginning in the first half of 2003. The last-mile optical market is expected to exceed $2.5 billion over the next three years ? a market that is on the verge of a revolutionary change. PurOptix is projecting revenues of $30 million by 2003 and over $150 million by 2005.
With billions of dollars spent laying fiber optic cable, network operators have a dire need to leverage this infrastructure by offering revenue generating telecommunications and media-rich services to businesses and consumers. PurOptix’s end-to-end optical solution enables network operators to support a broader offering of voice, audio, video, high-speed Internet, and data communications services in a secure, full duplex environment.
The PurOptix AON System family of products provides a scalable community and metropolitan network platform for fiber-optic infrastructures. The proprietary design delivers maximum bandwidth to each subscriber and maximum return for the network operator’s capital investment. The PurOptix system can be implemented as an open network, an exclusive closed network, or any variation therein for delivery of Internet, telephone, television, video and data services.
The first product set, the AON System (Advanced Optical Network), consists of four proprietary technologies ?
1. Network Operating System software running on carrier grade OEM network servers and switches;
2. Low cost ATM concentrator;
3. Optical gateways for commercial and residential applications; and
4. High speed internet enabled-digital settop box.
The ATM concentrator and Optical gateways devices can also be sold and deployed in existing telco and CATV optical network applications serving business customers enabling network operators to seamlessly integrate ISPs, broadband content providers, phone, TV, and other digital service providers via fiber to the home or enterprise.
PurOptix is first targeting utilities moving to generate additional revenues over existing fiber infrastructure. Then, PurOptix will be the system provider of choice for incumbent telcos and CATV companies to migrate from copper/cable to all fiber optic plant. Internationally, PurOptix is targeting major network operators who are rapidly deploying new optical infrastructure due in part to a global environment of privatization and deregulation. Similar to Batelco, these companies are building only fiber networks in new developments and are aggressively replacing copper infrastructure.
Manufacturers of PON (Passive Optical Network) technologies have begun to announce field trials and some slightly different Ethernet-based solutions are moving forward as well. Hybrid Fiber/Coax (HFC) and Digital Subscriber Line (DSL) systems manufacturers are focused on non-optical plays and are not considered to be direct competitors.
PurOptix’ Competitive Advantage
– PONs face a shortage of upstream bandwidth for delivery of advanced two-way services–they are bandwidth constrained. PON’s additionally are difficult to deploy and have proven to be too expensive (both opex and capex) to be a viable solution on a large scale. The AON System delivers 155 Mbps to and from the subscriber today. HFC and competing fiber solutions are flawed by following a “broadcast” architecture which consumes the majority of the bandwidth available. These systems also restrict network operator’s business options due to the legacy architectures and restricted access models. The AON System manages bandwidth efficiently, is infinitely scalable, and offers numerous flexible business implementations. The flexibility in business modeling stems from the open architecture design which allows for variations from full wholesale implementation to the traditional retail provider deployment.
– Unlike competing solutions, PurOptix AON System is completely secure from the subscriber to any point on the network or any external network node connected via PVCs (Private Virtual Circuit). In addition, the PurOptix devices cannot be cloned or pirated, absolutely barring theft of service on the network.
– Using ATM as the core transport we provide proven reliability and allow for easy integration into most networks today. Equipment can be implemented in standard ATM and SONET networks leveraging the installed base of equipment.
– Upgrades in the future to competitor platforms will be costly due to architecture limitations and limited service capability. The AON System can be upgraded easily as bandwidth needs grow.
The website has detailed technical information:
Stan Gafner President & CEO
Puroptix Inc., Carlsbad CA
email@example.com 760.804.7890 x5101
Subject: UFTO Note- E-lecTrade Enables Trading of Structured Products
Date: Thu, 01 Aug 2002
E-lecTrade has developed a sophisticated solution for buyers and sellers of power to manage and procure complex structured power contracts that cost-effectively and with a proper risk profile meet their needs for the supply and demand of electricity.
Most power contracts are for “standard products”, fixed large blocks of power at constant MWs for many hours(think baseload). Everything else under the load curve (think intermediate and peak) needs to be filled in–with “structured products”. Despite the fact that these needs represent 50% of all transacted power, no efficient process for executing structured power transactions exists. RFPs are messy and time consuming, and most of the need is met on the spot market.
E-lecTrade’s sophisticated technology manages the assembly, evaluation, and buying and selling of “structured products” — contracts to purchase or sell power in which either the volume and price of power or duration of a contract varies over time.
E-lecTrade’s products include ShapedPowerTM, %PoolTM, Swing Options, Generation Tolling, Ancillary Services, Transmission, Real Time Power and Standard Power. In addition, the platform provides real-time risk measurement and portfolio management capabilities including MTM, VaR and Scenario analysis seamlessly integrated with the marketplace. The technology can be used both as principal-driven private marketplace serving its own customers and as an independent exchange. Energy and Power Risk Magazine recently named E-lecTrade the Energy Innovation of the Year.
Very recently however, electronic trading has all but collapsed in the US, due to credit risk (and career risk aversion on the part of utility personnel) in the entire power industry, and with it the E-lecTrade’s “runway” to grow the business. As a result, the company is now for sale. Discussions are already underway with several potential buyers.
The original business model was to operate an exchange; 24 companies have already signed up as participants. Now, a new owner of the company would have exclusive control of the software and IP assets, with the option to leave the exchange in operation or not.
For a utility with many large commercial and industrial customers, a private exchange based on E-lecTrade’s unique platform could be a powerful tool to serve customers better in managing their forward structured needs. Large C&I customers could manage their portfolios, get offers from the utility, and even bid to sell power back (i.e. DSM).
I have a six page technical overview document from the company, which I can supply on request. The company website is http://www.e-lectrade.com
For more information, contact:
Anil Suri, President and CEO
E-lecTrade, Inc. Tarrytown, NY
914- 524-7390 firstname.lastname@example.org