In a deal that will position it for cable’s shift to more efficient, next-gen access networks, Nokia has inked a deal to acquire Gainspeed, a startup that has been developing a “virtual” form of a converged cable access platform (CCAP) that will help pave the industry’s path toward an all-IP future.
Financial terms were not disclosed, but Gainspeed, a Sunnyvale, Calif.- based company founded in 2012, has raised about $55 million thanks to investors that include NEA, Andreessen Horowitz, Shasta Ventures, Technicolor and Juniper Networks, which led Gainspeed's "B" round and, until Nokia swooped in, was considered to be among the top potential suitors if Gainspeed sought an M&A exit.
The deal is expected to close in Q3 2016, with Gainspeed becoming part of Nokia's Fixed Networks business group, which is led by unit president Federico Guillen. Gainspeed presently has about 70 employees, but it’s not yet known how many will be joining Nokia.
For Gainspeed, the acquisition should give its technology and products a much better shot at gaining significant adoption among larger operators, which tend to shy away from making major commitments to startups. Gainspeed has not announced any trials or deployments with cable operators. However, top execs from Comcast, Liberty Global and WideOpenWest offered quotes in the announcement praising the deal (see below). Among that trio, WOW said it is "well down the path" with testing and "preparing for deployment" of Gainspeed's vCCAP.
For Nokia, which closed its merger with Alcatel-Lucent earlier this year, the addition of Gainspeed will complement its current fiber access products and arm it with a vCCAP as MSOs apply more weight to virtualized and more distributed hybrid fiber coax (HFC) network architectures amid the roll out the multi-gigabit DOCSIS 3.1 platform and their migration toward an all-IP service platform.
Nokia’s purchase of Gainspeed will also enable it to compete in a CCAP sector that includes companies such as Arris, Cisco Systems, Casa Systems, Harmonic, and Huawei, among others.
While today’s CCAPs are highly centralized and some vendors, such as Cisco, are pushing for remote PHY approaches, Gainspeed angle with a virtual CCAP will distribute the MAC and PHY to the edges of the network while centralizing the control and management of the network in the data center. These various approaches have formed the basis of a healthy debate in cable engineering circles.
Gainspeed was founded by Shlomo Rakib, a DOCSIS pioneer and co-founder of Terayon Communication Systems (sold to Motorola in 2007).
In that interview, Padmanabhan acknowledged that operators will not be eager to rip out their networks and start from scratch just to introduce virtual CCAP, offering that interest in the approach is “most likely a cap-and-grow strategy, meaning in a given headend or a city where they already have significant investments of edge QAMs and CCAPs in there.”
He was also confident that Gainspeed could resonate with bigger operators that don’t typically place big bets on products from startups because the technology it brings to the table can solve some important problems.
“If we were walking in selling some commodity and we’re the fourth supplier and the other three are big companies, I think it would be a very difficult task. The reality is, we’re not walking in offering a commodity. We’re walking in helping them solve a massive and pressing business problem with this IP traffic explosion.”
Here are the statements from MSOs praising the deal:
“New and innovative services in broadband are important to us and to our customers. We appreciate technology partners who make innovation one of their core values and look forward to Nokia and Gainspeed joining forces to bring new technologies and products to the industry.”
— Tony Werner, President, Technology and Product, Comcast Cable
“Gainspeed is one of the pioneers in the Remote PHY and Remote MAC-PHY architecture development. They have been committed to developing this solution for the cable industry, and I congratulate them on becoming part of Nokia. The combination of Gainspeed’s innovations and Nokia’s scale will be a positive contribution to the access solutions for our industry.”
— Balan Nair, Chief Technology Officer, Liberty Global
“Gainspeed has been a leader in the broad industry shift toward Distributed Access Architectures to handle increased bandwidth demands and support of the network transformation to all IP. We are well down the path testing and preparing for deployment of Gainspeed’s Virtual CCAP solution and have been using Nokia access products for years. We are excited to see these technology leaders coming together, and view their solutions as a key strategic component in our network evolution and delivery of gigabit services.”
— Cash Hagen, Chief Technology Officer, WOW! Internet, Cable & Phone