CopperCom, DTI Networks to merge

Voice over DSL's popularity is increasing as the technology continues to mature, and comes closer to earning the carrier-class stamp. But one voice-over-DSL vendor is trying to ensure that its future is not dependent on just one product.

CopperCom will announce today its merger with DTI Networks, a softswitch vendor. Terms of the agreement were not disclosed, as both companies are privately held, though CopperCom appears to be the controlling force in the combined company, which will maintain the CopperCom name.

The acquisition theoretically broadens CopperCom's service provider customer base, giving it a softswitch to add to its voice-over-DSL gateways or integrated access devices.

Teaming with DTI also will provide a logical migration path for the future, said Brett Shepphard, lead DSL analyst with TeleChoice.

"It creates a more compelling business case for CLECs," said Martin Taylor, chief technology officer for CopperCom. While the service providers can offer an array of services with voice over DSL, they also can circumvent Class 4 or Class 5 switches.

"The cost of acquiring a Class 5 or Class 4 switch is very expensive, and the softswitch lets them get around that economically," said Ron Nash, vice president of marketing, with DTI Networks.

The softswitch technology will be another way service providers can attract customers. "When service providers use the Class 5 or Class 4, they have the exact same feature set as everyone else," Nash said. "And that is not a very comfortable long-term position, given what incumbents can do."

"It's a good step for [CopperCom] because it shows that they aren't a one-trick pony," Sheppard said.

The technology also enables more "selective niche services," such as call forwarding, that are far more difficult to do with a Class 5 switch, Shepphard said. "It is hard to get all the bells and whistles and get things such as billing and implementation streamlined [with the Class 5]."

By joining forces, the companies also hope to offer more stability to customers and provide a more interwoven product set, letting customers streamline service offerings. Though most vendors rely on partnerships to increase customers' comfort level, taking partnership a step further was a necessity for CopperCom and DTI.

"It just makes more sense [than partnership]," Taylor said. Customers will feel more at ease working with one larger company than two disparate relatively young companies, he added.

"We will also be able to achieve a much greater level of integration and improve things such as flow-through provisioning," Martin said.

Although that increased level of customization and integration will be key to the combined CopperCom offering, it may conflict with existing partnerships with other softswitch vendors.

"Do they still have the relationship with other providers?" Shepphard asked. That area likely will be more complicated than in the past, but not impossible.

Other voice-over-DSL vendors seem content with continued partnerships and impending IPOs. Last week, Accelerated Networks formally announced plans to pursue an IPO, while Jetstream Communications also intends to go public soon.

"Following their IPOs, and once they have a lot of cash in the bank, acquisitions will most likely ramp up," Shepphard said. "CopperCom has just been more forward-looking than the others."

The voice-over-DSL vendors simply seem to have their priorities in a different order, with some concentrating on services and others focusing on products, Shepphard said. Voice over DSL is set for large-scale deployment in the second and third quarter of this year, he said, and "there is plenty of business to go around."