CENX Gets Ericsson on Its Side

Ericsson AB (Nasdaq: ERIC) has joined Verizon Communications Inc. (NYSE: VZ) in funding CENX Inc. , the Ethernet exchange startup, the companies announced Monday.

The companies aren’t saying how much Ericsson contributed; it’s “multiple millions” of dollars, CENX CEO Nan Chen tells Light Reading. Verizon’s investment arm was part of a $9.5 million round that CENX raised in June.

Why this matters
Ethernet exchanges have developed more slowly than many had hoped. Ericsson’s services division can now count as a sales channel for CENX, giving the startup a level of carrier access it didn’t previously have.

CENX’s role in managed services could be bolstered by the Service Provider Information Technology (SPIT) angle of its business: the ability to go beyond physical port connectivity and act as a mediator at the OSS layer.

The Verizon investment points to a potential Ethernet exchange market, too — for competitors such as Equinix Inc. (Nasdaq: EQIX), not just CENX.

Mobile backhaul is an opportunity, because carriers usally take bids for one provider to back up all the cell sites in a particular area. “The chance of anything other than an ILEC winning are very small,” Chen says. The suggestion is that CENX can make it easier for an operator to combine multiple backhaul providers, some of which might charge less than the ILEC.

That argument might sound anti-incumbent, but mobile backhaul, in general, was a motivation behind Verizon’s investment.

“We think that as 4G rolls out, they’re going to be a key player, as well as serving the wholesale market,” said Daniel Keoppel, executive director at Verizon Ventures, during a panel at last week’s Telecom Council Carrier Connections conference. (See Photos: Startups & Telcos Mingle at TC3.)

Why else this matters
Chen is a multiple-time Leading Lights award winner, which allows us to make this reminder: The deadline to file entries for the 2012 Leading Lights is Monday night, a.k.a. pretty much now. Enter here.