Ex-Cabletron crew gains new funding for startup

A new company with deep Cabletron Systems Inc. roots this week announced US$7 million in second-round financing from private investors.

Pannaway Technologies Inc., based in Portsmouth, N.H., says it plans to put the funding to use in promoting its initial products, which are designed to help local exchange carriers and cable operators deliver broadband services more efficiently to SOHO and residential customers. The company, which received US$5 million in first-round funding, introduced itself and its first product at the Supercomm 2003 conference in Atlanta this week.

The start-up, formed in April last year, is led by president and COO Bob Barber, formerly senior vice president of business development at Cabletron and an executive with its then subsidiary Enterasys Networks Inc.. Also on the management team is CTO Michael Skubisz, formerly president and CEO of Aprisma Management Technologies Inc., a Cabletron spinoff focused on management software.

Robert Levine, one of Cabletron's co-founders, was the lead investor in both rounds. In a statement, he said Pannaway has built products that service providers "have been waiting for" and that he's looking forward to seeing the company "take off."

Pannaway calls its offering the Service Convergence Network, a collection of products designed to enable service providers to deliver end-to-end voice, data and video services over IP. The company's first product, the Personal Branch Gateway, costs $465, sits on a customer site and combines the functions of a router, Internet modem and telephony system complete with CLASS/Centrex services. The box (acquired and installed by the service provider on behalf of the customer) features two switched 10/100M bit/sec ports, a firewall and VPN security, among other things.

Other products to be rolled out include a broadband access switch, aggregation router, media and signaling gateway and management software.

Pannaway's initial goal is to help independent and rural telephone companies offer triple play packages of voice, video and data. These carriers are under pressure from increasingly aggressive cable operators that have added toll quality voice to their data and cable TV bundles.

"[The carriers] have voice and data stories, but have come up short on the video side," Skubisz says. Pannaway, he says, changes the way television works by exploiting IP multicast, ADSL and other technologies to enable carriers to deliver video without bogging down their nets. This is particularly important for delivering high margin services such as video-on-demand that typically require the cordoning off of channels, he says.

Pannaway's technology is designed to exploit the move from circuit-switched networks to packet-based nets, a move that carriers and cable providers alike are making, explains Skubisz. "We think our timing is good," he says.

While trying to pry dollars out of any carrier might seem like a tough go in this economy, Skubisz says rural and independent carriers didn't spend wildly during the dot.com era and are actually "looking to spend money now."

Skubisz anticipates Pannaway will run into a "fairly crowded" field of competitors, such as Linksys Group Inc. (in the midst of being swallowed up by Cisco Systems Inc.), Motorola Inc. and Siemens AG. One edge Pannaway will have, he says, is that many competitors are not IP-centric.

Pannaway employs 48 people and gets its name from an historic community in New Hampshire.

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