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Pannaway Technologies: Turning Copper and Fiber into Gold (Part I)
[July 26, 2005]

Pannaway Technologies: Turning Copper and Fiber into Gold (Part I)

TMCnet Communications and Broadband Columnist

While baseball fans track Chicago Cubs outfielder Derek Lee as he pursues the National League Triple Crown (having the highest batting average, most homeruns and RBIs), Pannaway Technologies, Inc. announced in a press release today that the company achieved an impressive statistical triumvirate of its own in Q2 2005.

Indeed, the Portsmouth, N.H.-based company, which offers converged triple play (broadband voice, video and data) platforms primarily to rural telcos, reported that Q2 2005 yielded the following results:

A 200 percent growth in revenue over Q1 2005;

It entered into 10 new agreements with IOC and CLEC customers located throughout North America; and

A tremendously successful $15.6 million round of private funding - bringing the company's total private investment to $56.1 million - led by primary investor S. Robert Levine. According to the release, the new capital will be used to further research and develop its solutions and to expand in the U.S. and internationally.

"Q2 was truly an explosive quarter for our company and we're excited about the activity that we're seeing in the IOC market," said Mike Skubisz, CTO of Pannaway, in a prepared statement. "Analyst sources combined with our own field experience indicate that the market for Triple Play solutions will enjoy steady growth during the next 5 years and we believe we're in a great position to capitalize on this growth with our cost-effective, highly scaleable and easy-to-deploy access solutions."

Because of its solid financial foundation and its targeted market, "[Pannaway is] in an excellent position," industry analyst Matt Davis told TMCnet on Friday.

Davis, director of the broadband access technology group at Yankee Group, noted that other companies either owned the IOC market space (such as AFC) and eventually sought larger quarry (RBOCs) or offered quality solutions (such as Erickson), but at the wrong time.

"Many observers, including myself, felt as though [AFC] took their eye off the ball and it created a market opportunity for others," Davis said, adding that several companies, such as Occam and Paradigm compete with Pannaway for the IOC market.

What separates Pannaway from other companies is, among other things, that "it is well-funded and [it] rolled the dice on IP and it turned out that IP is now attractive," Davis said.

Pannaway finds itself in such a favorable position not only because its solutions deliver as advertised, but also because a few gambles paid off.

For approximately 100 years, rural telcos enjoyed geographic monopolies, which insulated them from having to compete (read: providing new services and lowering prices) for telephony consumers; they literally were the only game in town.

Within the last few years, however, cable companies started to rain on the rural telcos' parade by offering triple play services (data, video and, voice) at low prices. Furthermore, wireless carriers and independent companies offering voice over IP, such as Vonage, took a bites out of the telcos' previously untouched market share.

All of a sudden, IOCs and CLECs found themselves in the unfamiliar position of having to offer high-quality IP solutions not to mention having to market them to keep from going the way of the dodo bird.

Indeed, while RBOCs like Verizon Communications and SBC Communications had the capital to invest in such ventures, many viewed the cost for rural telcos to provide voice, data and video IP services as prohibitive. The prevailing opinion was that telcos would have to build new fiber-optic networks that would cost of thousands of dollars per consumer.

Enter Pannaway and its Service Convergence Network (SCN), a suite of products that bridges a telco's legacy infrastructure with its emerging IP packet-based network. To be clear, Pannaway is not another DSLAM vendor, Skubitz told TMCnet on a recent visit to Pannaway's headquarters.

Indeed, Pannaway offers IP solutions that not only have features that are innovative, practical and easy to use; they're also really cool.

For example, Pannaway offers a solution that enables teclos to offer primary-line VoIP that meets all federal and state regulations. In doing so, Pannaway's engineers shored up several deficits associated with VoIP, including the lifeline support problem. (More on Pannaway's voice innovations tomorrow).

Pannaway also assists its clients with what can be a rough technological transition; they even provide customers with marketing advice.

As for whether Pannaway delivers on its promises, proof is in the pudding. Ten new customers, such as Bruce Municipal Telephone Systems in Ontario, Canada; KPU Telecommunications in Ketchikan, Ala; Empire Telephone in Prattsburgh, N.Y; and Seneca Telephone in Seneca, Mo., inked deals with Pannaway in the last three months alone.

(Pannaway's voice and video innovations will be highlighted in tomorrow's installment.)

Ted Glanzer is assistant editor for TMCnet. For more articles by Ted Glanzer, please visit:

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