Taqua System gets $18.5 million funding

Taqua Systems today announced it has secured $18.5 million in a fourth round of funding that the next-generation switch vendor claims will sustain it until the company reaches profitability.

Taqua has positioned its Open Compact Exchange (OCX) as a full Class 5 alternative. Because of the product’s ability to scale, it has developed traction with rural carriers, including Adams TelSystems and Hickory Telephone--two independent phone companies Taqua announced as customers today. Both currently are using the OCX primarily for Internet-offload functions.

But, unlike many next-gen switch vendors, Taqua’s product includes a full set of Class 5 services and an interface that accepts POTS lines directly, according to Doug Klaiber, Taqua’s senior director of business development. The OCX’s scalability makes it an ideal fit for rural carriers wanting to displace older circuit switches, particularly on lines purchased from Bell companies, he said.

“The rural market is a very dynamic and growing market,” Klaiber said. “[Independent] carriers have money and Class 5 network experience.”

By the end of the quarter, Taqua hopes to become the first new switch vendor certified by Rural Utility Services in a decade. The company expects independent carriers to account for most of its revenue into 2003, when the vendor expects to become profitable, Klaiber said.

Although it does not have a Bell company sponsor, Taqua has started the OSMINE testing process and hopes to be in position to penetrate the RBOC market next year.

The funding round was led by Bessemer Venture Partners and Columbia Capital--Taqua’s incumbent investors--as well as first-time investor Court Square Ventures. The financing is particularly welcome news after November, when the company announced layoffs and imposed a mandatory “vacation” as part of a cash-conservation effort.