Entrisphere will announce this week that it has closed a third round of funding, totaling $75 million for its existing investors.

The announcement comes one week after the company unveiled a new line of optical network terminals (ONTs) and said that it had signed a deal with Grande Communications to provide it with a fiber-to-the-premises (FTTP) platform. The new BLM T100 Single Family Unit ONT is the first of what will become a series of ONTs for the vendor's BLM 1500 FTTP platform.

Grande, one of the more aggressive overbuilders in the U.S., plans to use the new ONT as part of an FTTP buildout in Austin, Texas, and San Antonio. The company previously had strong fiber to nodes serving 24 homes but is not planning to bring fiber to every home in its service area.

“Grande has been in the business of building deep fiber networks,” said Bill Morrow, CEO of Grande, which has 125,000 customers. “We're now evolving our network one step further.”

For Grande, which provides voice, video, high-speed data and security services, the decision was largely economic. Among the more unique aspects of Entrisphere's ONT is the ability to deploy just the basic gear and then add electronics as the customers sign up for service. That model takes away much of the cost risk, Morrow said.

The company spends, on average, about $50,000 per mile to build out a fiber/copper network, he said. Building fiber past every home but not running drop cables brings that down to $35,000 per mile.

“Going fiber to the home, you increase cost on the CPE, but you take some sunk cost and bring that to success cost,” Morrow said. “We like that. Some miles of plant we do extremely well, some not so well. This gives the averaging back to us because in the miles we don't do well, we don't lose that sunk cost.”

Grande is the second publicly announced customer for Entrisphere, which also is providing FTTP equipment to TDS. Though both are relatively small in the grand scheme of telecom, the vendor is geared specifically to serve Tier 1 carriers, said Peter Bourne, senior vice president of marketing and business development for Entrisphere. That the company was able to raise $75 million to expand operations — and all from existing investors (see chart) — is affirmation of its plan, he added.

“At that level of funding, that confirms our target customer base,” Bourne said. “We're not chasing the 1200 [independent operating companies] with $75 million in funding. We're going after the top 25. This is all about ramping up to serve our large company customers.”

Those top-tier players have been putting greater emphasis on vendors that are well-funded, but Bourne said the round didn't come at the behest of any existing client.

However, to get into the highest levels of tier-one carriers, the company may be forced to partner with a larger play, said Teresa Mastrangelo, principal analyst for broadbandtrends.com.

“The Tier 1s want their vendors to take a key role in installation services,” she said. “The technology is competitive, and they've got a nice forward-looking view, but if Entrisphere were to get a key account in the millions of lines, I could see them having some benefit by partnering.”

The company's aggressive push on interoperability of its platform with other vendors' equipment also should help, she said, adding that there are several larger vendors out there that could use Entrisphere's platform to fill in product-line gaps.

“Right now in the accounts they've announced, they seem to be going in as a niche for a specific need,” Mastrangelo said. “The long-term goal would seem to be to expand that.”

ENTRISPHERE'S BACKERS:

• Accel Partners
• Benchmark Capital
• Crosspoint Venture Partners
• Duff Ackerman & Goodrich
• El Dorado Ventures
• The Ontario Teachers Pension Plan Board
• STAR Ventures
• VantagePoint Venture Partners