VentureBeat

updated
Stoke, a Silicon Valley company building a technology that allows multiple telecom networks to talk with each other — from WiFi, WiMax and others — has raised financing from one of the world’s fastest major telecommunications companies, Reliance Communications.

The amount was undisclosed, but a source told VentureBeat is was on the order of $10 million, or similar to the investment Reliance made recently in E-Band Communications, a US-based company that makes high-capacity wireless systems for the 70/80 GHz E-band spectrum.

Reliance is run by Anil Ambani (pictured here), reportedly the third-richest man in the India. [Update: The data on wealth is confusing. While Forbes in one report apparently puts Ambani's wealth at $45 billion (which would make him the 4th wealthiest in the world), in another it estimates his worth at $18.2 billion.]

Reliance serves more than 35 million users.

Stoke carries some cache, because it is backed by two of Silicon Valley’s top venture capital firms, Kleiner Perkins and Sequoia Capital, and because it’s one of the few ambitious wireless telecom startups to emerge in Silicon Valley in recent years. It has raised more than $50 million from its investors, which also include DAG Ventures. (We described Stoke in more detail when it raised a financing round earlier this year.)

Reliance of India, meanwhile, becomes Stoke’s first customer endorsement to be made public. In an interview, Stoke’s VP of marketing, Keith Higgins said Reliance is one of the more active telecom companies experimenting with technologies on the “edge,” or the place where its wireless various networks converge. These networks range from CDMA, to GSM, to the more futuristic WiMax and LTE. Stoke provides “convergence gateways” for multi-platform operators such as Reliance. When you arrive home from work, for example, and enter your house, Stoke lets your cellphone automatically switch from a cellular network outside to detect your home WiFi network.

The company had always expected that it would market its products first to foreign carriers, because “they’re moving faster,” Higgins said.

Stoke’s product is still being developed, and will likely need another round of funding at some point. Higgins said the company has enough money to last through to next year.

We wrote about Stoke, the start-up working on a way to let you switch your mobile phone to your better, WiFi connection at home, when you arrive there.

And when you leave your home, it will switch your phone back to the cellular network, until you arrive at work, at which point its switches back again to hook up with your employers’ broadband — all the while letting you use the best network available.

See our original story here.

It doesn’t do that merely for mobile phones, but for any device — as long as your carrier incorporates Stoke’s technology.

The Mountain View company essentially makes fixed line, wireless, DSL and cable networks all one big network, “so that they all play together,” said Keith Higgins, vice president of marketing.

In 2004 and 2005, Kleiner Perkins Caufield & Byers, Sequoia Capital and others injected $30 million into Stoke. Now the company has raised $20 million more, led by new investor DAG Ventures and including existing VCs, Kleiner Perkins and Sequoia Capital. Northgate and the Ontario Teachers’ pension participated too.

Stoke’s product • the Stoke Session Exchange (SSX) • has won some customers, including a large carrier in Japan, VP of Marketing Keith Higgins told VentureBeat. Ten or so other operators are looking to strike deals on fixed-wireless convergence technologies, and so he hopes to make more announcements soon. Stoke’s role is very specific — it focuses on “session management,” meaning it does things like authenticate users when they call into the network, manage policies governing those users, and so on. It is up against the traditional subscriber manage vendors (Redback, Juniper, etc.), says Rick Thompson, Senior Analyst, at Heavy Reading. Thompson expects these players to soon role out similar services.

Higgins tells VentureBeat that the main challenge will be to get carriers to upgrade their technology, something analysts agree with. Joe McGarvey, analyst with Current Analysis, says:

Is the market ready for it? If you are asking if carriers are going to go out and dump all of their existing access infrastructures and adopt the Stoke box the answer is no. However, the Stoke device is build in a modular manner that makes it possible for carriers to adopt the technology to delivery one or two functions and then perhaps migrate other functions to the box down the road, as the carrier further consolidates its infrastructure.

We mentioned other companies operating in fixed-wireless convergence in our previous story. Some include Azaire Networks (which has raised about $32 million), BridgePort (about $51 million), Kineto Wireless (about $77 million) and LongBoard (about $65 million) and Reefpoint (about $120 million).

See diagram below, illustrating how Stoke wants to allow someone to switch between networks: