Convedia gets $11.25 million in backing

Burnaby high-tech company will further develop and market its Internet-speeding CMS-6000 Media Server

by Therese Hadley

Burnaby-based Convedia Corp. has received backing from heavyweights in the technology field to develop and market its CMS-6000 Media Server, which helps speed voice and data over the Internet.

The investors in the $11.25-million deal include financing round leader Celtic House (www.celtic-house.com), one of Canada's largest venture capital firms.

Celtic House was established in 1994 by Terry Matthews, the founder of Mitel and Newbridge Networks, and has funded a number of high-tech success stories including Burnaby's Abatis Systems, which was acquired by Redback Networks for US$636 million in July. It also funded Extreme Packet Devices, bought by Burnaby's PMC-Sierra Inc. for US$415 million in March 2000.

MDS Capital, the $68-billion Ontario Teachers Pension Plan and Altimira, one of Canada's largest independent providers of mutual funds, also participated in the Convedia financing.

Now Convedia cofounder and newly appointed CEO Peter Briscoe wants to expand beyond Canadian investors.

"I would like some U.S. investment, but it's not just for the money," said Briscoe, who has held senior positions with Nortel Networks and was a director of product management at Newbridge Networks from 1992 to 1995.

"We need the contacts in the industry to sell into the US market -- that's where I have to be," he said.

Convedia's server enables service providers to deliver a broad range of both traditional and emerging services over the Internet and computer networks. The processor delivers real-time services such as voice- and video-conferencing, speech-based prepaid and calling card services and traditional interactive voice response (IVR) services.

Goepel McDermid Inc. analyst Jason Zandberg called the technology "very significant."

"All of the big telecommunications players like Telus are trying to provide more IP [Internet Protocol] services to their clients, such as video-conferencing and other packet-based services. For a number of years, switched networks have been dedicated solely to handling voice calls. The packet networks can deliver all these other services, but they need a server to handle them," he explained.

"Telecommmunications companies have made billions on the switched network using just a phone. Now they can deliver a variety of Internet services delivered to your PC. When you think what they did with the phone compared to all these enhanced digital services now possible -- that will be the pot at the end of the rainbow."

Briscoe and cofounder Grant Henderson were busy last week launching the new Media Server at the recent Fall 2000 Voice on the Net (www.pulver.com) trade show in Atlanta, reputedly the largest gathering of the Voice over Internet Protocol networks (VoIP) industry to date, with 170 exhibitors.

Briscoe said the latest figures released at the show revealed that 60 per cent of the $60 billion in venture capital currently available was earmarked for communications, while 30 per cent will go to software and computers. "Telecommunications is the darling of the venture capitalists and around half of that is expected to be invested in Voice over IP packet telephony," said Briscoe.

He said the company's new media server will enable the processing of a variety of different media streams, such as interactive voice response systems, audio conferencing (from hundreds of participants in a chat group to smaller business groups) and voice-controlled services where voice commands are activated. Convedia expects to begin commercial shipments later this year.

Tom Valovic, research manager of IP Telephony at Int'l Data Corp. (www.idc.com), said the enhanced services market will be a key driver of Internet protocol telephony and converged solutions in the future. "Media servers will play an important role in bringing those services to market quickly and cost-effectively," he said.

Worldwide, IDC predicts IP telephony minutes will explode from 310 million minutes in 1998 to 135 billion by 2004, bringing in revenues of $19 billion.

Convedia's Henderson worked on broadband applications marketing at Newbridge Networks and previously managed the University of Ottawa's Multimedia Communications Re- search Lab.