Mark it with an O

TallGrass Communications and Vertex BroadBand, two start-up service providers less than a year old, have discovered a way to bypass the upfront costs of implementing an operations support system (OSS) and speed their time to market. The companies called upon Coreon.

Coreon, which calls itself an operations services provider (OSP), outsources the systems required to run service providers' back office and the operations organizations. It provides operations services, provisioning services and network operations center (NOC) services. For billing, Coreon has partnered with an as-yet unnamed billing application service provider.

“We would be considered more of a managed service provider [MSP], but we [put] the ‘O’ in front because we provide specific operations functions for the carrier,” said Coreon CEO Stan George.

Coreon provides network monitoring, network management, provisioning, electronic bonding and billing as a complete package or on an unbundled basis.

TallGrass and Vertex use the OSP platform, Coreon's end-to-end suite; a third, unnamed customer uses only the monitoring functions, George said.

TallGrass currently offers high-speed broadband Internet access to small and medium-sized businesses across the Midwest. The company plans on offering packetized voice and data on the same broadband connection using a combination of T-1 loops and DSL loops and using a billing system provided by Coreon, said Sunil Kripalani, TallGrass' vice president and chief technology officer.

TallGrass, which is in the process of raising its next round of financing, has not completed a full-scale buildout of its network and has a “handful” of beta customers. “What the Coreon model allows us to do is have best-of-breed, so [TallGrass] has a level of OSSs that is much larger than our company size would normally imply,” Kripalani said.

Vertex targets small businesses with about six to eight voice lines. The company currently has a data network in the suburban Chicago area and plans to attack the market by exploiting the latest voice-over-DSL technologies.

The company offers high-speed Internet access and service level agreements, Web hosting and Web development services. Vertex plans to add local and long-distance voice and associated services such as voice mail. Vertex uses its own billing system but will use Coreon's when it transitions to voice.

Coreon believes its strengths are the breadth of its services and its intellectual property, and TallGrass and Vertex seem to agree. Ron Gavillet, CEO of Vertex, said that Coreon allows users to focus time and resources on other areas. “It enables you to rapidly scale on that sales and marketing side because that infrastructure is already in place waiting to be built upon,” he said.

Coreon uses frame relay to connect its customers' networks. Its data center is in New York; its NOCs and provisioning centers are in New York and California. Coreon recently secured $73 million in third round financing, which will float the company until late next year when it expects to have a positive cash flow.

While Coreon has a good financial foundation and experienced leaders, including Bob Annunziata as chairman of its board of directors, the company has an uphill battle ahead.

According to Ferial Shomloo, senior analyst in Stratecast Partners' OSS practice, Coreon has a strong management team, strong backers, some good partnerships and is well funded, but its weakness is the market it's targeting. “Bringing on new sales is going to be challenging and even if they do sign up customers, there will be a high level of uncertainty about their customers' viability going forward,” Shomloo said.