Sonus bags Time Warner for IP telephony buildout

Red-hot packet telephony vendor Sonus Networks has racked up another key service-provider win.

Sonus, which produces a family of IP service-creation, signaling and data-traffic offload gear, earlier last week signed a 3-year agreement with Time Warner Telecom valued at up to $US75 million.

With the Time Warner Inc. contract, Sonus continues a pattern of selling its gear not only to new IP telephony carriers but also established service providers.

Time Warner currently employs traditional Lucent Technologies. 5ESS central-office circuit switches in 21 markets. By the end of this quarter, Time Warner will install the Sonus Packet Telephony suite in four of those central offices - New York, Indianapolis, Austin and San Diego - with additional locations to follow, Time Warner senior vice president Mike Rouleau says.

Sonus has previously won similar arrangements with established carriers Global Crossing Ltd. (formerly Frontier Communications) and Intermedia Communications Inc. It also has deals with new carriers with fresh IP buildouts such as BroadBand Office, USA Datanet and Cybertel.

The Sonus Packet Telephony suite includes three elements. The first is the GSX9000 Open Service Switch, an access concentrator that emulates many of the functions of a Class 5 telephony circuit switch. Next is the PSX6000 SoftSwitch, which controls service definitions and provisioning. Finally, Sonus offers the SGX2000 SS7 Signaling Gateway, which provides interconnection to the public switched telephone network and enables functions such as 800 toll-free dialing over IP networks.

In addition, Sonus has sold carriers on the ability to recoup their investment with an optional adjunct: the Sonus System 9200, which detects modem-originated Internet traffic and offloads it away from valuable ports on traditional circuit switches. That provides an "immediate payback" for traditional carriers that are in the process of migrating from circuit to packet switching, Sonus President and CEO Hassan Ahmed says.

Key to Sonus' wins is the fact that its product family constitutes more than merely a circuit- to packet-switched gateway, as in the original generation of IP telephony carrier products. Another is scalability. On traditional circuit switches, it takes 40 racks to handle 50,000 simultaneous calls, while on the GSX9000 it takes two 19-inch racks, Ahmed says.

One way that Sonus achieves this is by removing key packet telephony resources such as digital signal processing from central processors and distributing them onto the port cards. "Every time you slide in the card, you slide in the control horsepower with it," Ahmed says.

A 1997 start-up, Sonus took its stock public in May. Ahmed confirms Wall Street analysts' reports that a key purpose of the IPO was to give Sonus a "public currency" to do acquisitions. If so, the strategy has been wildly successful.

Sonus has gone up 10-fold in a rough market for tech stocks, from an initial price of $US23 to a closing price of $US237 on Wednesday.

Sonus, in Westford, Mass., is at: www.sonusnet.com. Time Warner Telecom, a spinoff of the Time Warner media conglomerate, in Littleton, Colo., is at: www.twtelecom.com.

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