NewStep Networks said today it has raised $7 million in Series B funding. Return investors are supporting the company’s standards-based approach to solutions that support fixed/mobile convergence.

Peter Seeligsohn, general partner for VenGrowth Private Equity Partners, said NewStep is helping carriers address FMC with the industry’s leading service convergence platform.

NewStep Networks will use the investment for both expanding its sales and support capabilities and developing new technologies. NewStep currently has active deployments and trials underway with Tier 1 carriers around the globe and expects to announce several commercial deployments in the next 30 to 45 days. The company is looking to 2007 for significant growth and expects significant improvement in the capabilities and availability of dual mode handsets over the next two to four quarters.

Preferring the term “service convergence” to fixed/mobile convergence, Craig Gosselin, chief marketing officer at NewStep Networks, said the market has changed over the last couple of quarters from one concentrated on dual-mode handsets to single mode—at least in the U.S.

“It appeared to be only about dual mode. Fixed/mobile convergence was synonymous with dual mode phones,” Gosselin said. “It’s exciting technology, but it has taken some time for those handsets to evolve. Now we see a rich, single-mode set of features, such as moving from a wireless device to a home or office phone at the touch of a button.”

NewStep also will use the money to invest in its support capabilities. “Since we interface with a carrier-grade environment and are now beginning commercial deployments, we have to make sure our support capabilities are world class to support our customer relationships,” Gosselin said.

He is beginning to see single-mode, enterprise solutions take the market lead in North America, followed by the consumer market, which is beginning to pick up. In Europe, Gosselin said, there is more excitement about dual mode.

The latest round of funding brings NewStep’s total to $27 million. Gosselin said the market will dictate whether the company needs to raise much more cash. He added that, “Revenue needs to start flowing for all the players in this space. This is really a new market,” he said. “It’s not like we’re trying to steal existing revenue from current competitors with a better gadget.”

Gosselin said every company wants to be cash flow positive as soon as possible. “But you don’t want to be so conservative that you miss a market move. Current investors are very confident in this market and NewStep’s ability to execute in it. We believe we have a lead on the technology side and in commercial deployments and we want to stay in that leadership position as this market evolves. This funding will help us do that.”