Oversi closed a $6-million funding round this month that brought the two-year-old Israel-based company’s total funding to $7.4 million. Oversi makes content delivery and storage systems meant to accommodate video content in an age of increasing peer-to-peer traffic. Oversi’s chairman and chief executive officer Joav Avtalion (also the former interim CEO of Pillar Data, Larry Ellison’s storage firm) spoke with Telephony’s Ed Gubbins about the company’s emergence from stealth mode and its plans for content delivery networks.

On the problem of peer-to-peer traffic: Those who use peer-to-peer (P2P) to download files to their computer and upload files for other users are consuming as much bandwidth as they can get. They normally try to transfer several files at the same time. It usually overloads the infrastructure of the [Internet service provider] in several ways. The ISP needs to serve many kinds of applications such as surfing, voice-over-IP, gaming and regular non-P2P downloads. If P2P suddenly consumes a lot of bandwidth on the lines that go to the backbone or on access networks, the other applications begin to suffer, and the [quality of service] on these applications begins to fold. Users immediately start calling the call center, complaining about the low QoS. It’s not good for the ISP. P2P is also, by its nature, a symmetric protocol, so users download and upload at the same time. But access networks are not symmetrical because usually ADSL and cable infrastructure allow you much thicker bandwidth for downloading than uploading.

On Oversi’s solution: Oversi’s product, which we install in the ISP infrastructure, serves as a buffer. When traffic is low, it can accumulate files that the user might need later on and, when needed, the user can get them from this buffer without the need to go on the long-haul lines. This eases the pressure on the long-haul or international lines. With a buffer in the ISP infrastructure, files can be downloaded from the ISP core rather than uploaded from users and downloaded again, which reduces the amount of traffic on the access network. Our product can also be calibrated by the ISP to determine how much P2P traffic is generated on the access network during peak times. The amount of P2P can be throttled down [then] and be made bigger during other hours of the day. During peak hours of P2P, you give priority to non-P2P applications. QoS is not damaged, and you keep the net neutrality principal to allow all kinds of traffic on the network. Efficiency is gained by the nature of P2P because the user downloading the file can also deliver it to other users. By us supplementing the ISP infrastructure with our appliances, we arrive at a lower cost to the ISP with guaranteed QoS.

On stockpiling hot files: We have an algorithm that looks at the demand for files and accumulates files according to demand so that, at any given time, the requested files can be supplied without overburdening the infrastructure.

On Oversi’s three products: The first product, OverCache, acts like a very scalable caching system. The technology we have is based on a distributed grid computing system technology developed by Oversi. On the same platform, we built the other two products. The second product, OverDrive, is network-based storage that ISPs can offer to customers on a network disk. Any user can have a vast area of storage on the ISP network where he can back up his computer and use this drive to download files, and it will happen much faster than downloading to the computer and will not overburden the network. We built it with our storage algorithm. The average cost of storage per user is low compared to other solutions in the market. The third product, the OverCache CDN, is also designed to enable an ISP to deliver content to users in a very efficient way and profit from it. You can monetize content by having users pay for movies, like iTunes [does], or with advertising. It doesn’t matter to the ISP as long as he can make money moving content through his network. We believe P2P is the most efficient and scalable way to move huge quantities of video. [Overi’s system] can receive content, manage the digital rights of this content according to the content owner’s policies, produce billing reports to whoever needs them, like advertisers, ISPs, etc.--all the required elements that make a content delivery network. The [CDN] will have the capability not only of moving the files but also streaming them, with a streaming algorithm we developed. You can broadcast a TV channel using P2P streaming capabilities on the network.

On U.S. availability: We are planning to introduce the OverDrive in the U.S. during the first half of 2007 and the OverCache CDN during the second half. We have some relationships already with U.S. companies that we’re working in cooperation with in other parts of the world. Maybe we’ll use those also in the U.S. or find others. As an example, I was one of the founders of Nice Systems. I used Lucent as a reseller of Nice equipment. I’m not saying [Oversi is] using [Lucent]. That’s just an example.

On the growth of P2P: The founders of Skype are developing a content delivery network based on P2P called the Venice Project. Warner Brothers signed an agreement with BitTorrent, the most popular P2P [site]. The market is recognizing that P2P is the way to go.

On YouTube: YouTube used the services of another company that does content delivery, not P2P. They had to pay a very dear price for it that almost took them to bankruptcy. If it had not been purchased by Google, they could have gone bankrupt because, according to what I know, they paid $1 million a month just to deliver content to users. They used a company, Limewire, that did the delivery for them. But this arrangement is very expensive and not scalable. I suspect that, in the near future, because Google itself is working in P2P, they’ll change the way they deliver content there.