CENX (news) are announcing a new round of funding this morning, adding $9.5M to the company’s coffers. They plan to use the new capital to fuel the next phase of growth powered by the ongoing industry transition from TDM to Ethernet. The new investment was led by Verizon Investments and Mesirow Financial Private Equity, with current investors DCM, Highland, and Wasatch also participating.
Verizon’s support in particular is quite interesting. The telecommunications giant had been an early supporter of CENX, listing its Ethernet endpoints on the exchange back in its earliest days. Since then, they have acquired Terremark and started building a cloud juggernaut, but they still see a need for an independent Ethernet exchange business to help with both mobile and terrestrial off-net connectivity.
The Ethernet Exchange business hasn’t been getting the same level of attention this year as it got in the prior two. The business models that we saw initially have all evolved, and CENX is no exception. These days there is a heavier emphasis on backhaul aggregation and services, although the off-net enterprise access piece is still an important piece of the puzzle.
Last month they unveiled an enhanced product set for Ethernet backhaul aggregation that offers visibility into both the order process and real time network performance for all off-net circuits, overlaying the customer’s existing tools. In its early iterations the Ethernet Exchange competed directly with self-negotiated NNIs between carriers, but the idea now is to offer much deeper capabilities than those NNIs generally can and thereby win over more of those who stayed on the sidelines.
The value proposition for CENX nowadays is less about the raw interconnects and more about the software that bridges the gap between different carriers’ systems. That’s a moving target of course, but the difficulty means there are more opportunities to add value and differentiation to the service.
Has CENX has got it right this time? Some heavy hitters certainly seem to think so.
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Not sure I get the business model, still. Eth Exchange is bust without a single throat to choke and a decent model for making the interoperation really rapid. As of now, every telco still just ends up slogging through with each other directly, because they would have to anyway with an Exchange partner. I recall in 2011 it had already become a cynical joke that others would use it for competitive pricing intelligence and never actually buy – now they aren’t even bothering to ask who is part of what exchange, they just start the negotiations.
I never saw much opportunity with Ethernet Exchanges. They didn’t really offer anything revolutionary. Same crap, different name. Same with cloud computing. Same crap, different name.
yeah, but how about those names!