For PhotonEx, More Is Better On Optical NetworksFor PhotonEx, More Is Better On Optical Networks

The lights haven't gone out completely for telecommunications equipment vendors, as high-capacity optical systems provider PhotonEx proved last week when it received $90 million in a third round of funding. The Maynard, Mass., company has received a total of $178 million so far, enough to keep it in business until late 2003, company executives say.

PhotonEx is developing its Ultrafast Dynamic Core 40-Gbps architecture for long-haul and ultralong-haul core optical-transport systems for telecom carriers. The company will deliver the first component of the architecture, a 40-Gbps dense-wave division multiplexing system, by year's end.

The provider is positioning its 40-Gbps system as a replacement for 2.5-Gbps and 10-Gbps pipes and promises that its products will carry more traffic further--and at a better price.

Most top-tier carriers have enough voice and data traffic on their major routes to fill a 40-Gbps circuit, says Russ McGuire, chief strategy officer at consulting firm TeleChoice. PhotonEx's latest funding shows the participating investors are reasonably confident that the carriers will choose to upgrade to 40-Gbps systems and that PhotonEx will win a reasonable share of the upgrade market, McGuire says.

Axxon Capital LP, Boston Millennia Partners, Castile Ventures, and J.P. Morgan Investment Management joined British venture-capital firm 3i Group, which led this round of financing. In addition, all of PhotonEx's previous investors again opened their wallets to the company.