Canadian hosted VoIP developer buys into mobility

An Ottawa developer of hosted voice over IP applications for service providers is expanding by buying a Toronto software company that creates fixed mobile convergence solutions.

Natural Convergence (NCI), which is controlled by a number of private equity companies including Terry Matthews’ investment arm, Wesley Clover, is buying NewStep Networks for an undisclosed price.

A Bell Canada spinoff, privately-held NewStep’s investors included Bell, the BEST Fund, VenGrowth Capital Partners and BDRC Venture Capital, a division of the federal Business Development Bank. BDRC has also invested in Natural Convergence.

“It’s an excellent opportunity for NCI to respond to growing customers needs,” Natural Convergence president Bill Crank said in explaining the acquisition. It also fits in with the company’s strategy of giving VoIP subscribers more value, thus bringing in more revenue to service providers.

Natural Convergence’s main product is Silhouette, a hosted multi-tenant application that providers can offer to small and medium businesses wanting to get rid of their PBXs. It’s designed to be added to a corporate TDM network or to integrate fully into softswitch networks. It includes services such as auto-attendant, extension dialing, directory services, centralized management and messaging.

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NewStep makes both hosted carrier and customer premises server-based platform called Converged Services Node (CSN) that allows convergence features independent of the underlying access technology. Offered in three versions, it features range from user defined ringing profiles to seamless roaming and handoff for dual-mode handset users across Wi-Fi and cellular networks.

While CSN will give Silhouette customers the opportunity to add true convergence features to their VoIP offerings, Crank said NewStep has technology “under the hood” that can be sold separately. For example, he pointed to NewStep’s SIP trunking capabilities. Still, he acknowledged that for a company with the word “convergence” in its name, NCI “needed to clearly get more into the mobile world and give our customers more flexibility than we had under Silhouette.”

Another benefit of the acquisition is that NewStep already has a base in Asia, where Natural Convergence is only begining to expand.

Probal Lala, CEO of About Communications, a Toronto service provider that’s been offering Silhouette-based service to customers since November, said the addition of NewStep’s fixed mobile convergence features “would make us much more competitive.” It would allow the company to not only offer business customers Internet and telephony, but also what he called “cellular-like” phone features. His company has signed up 17 VoIP customers in the past seven months, he said, and hopes to add as many as 10 a month.

NCI considered building a solution itself, Crank said, but that would have taken time and money. Besides, he added, “if there’s a proven platform out there that works and its solid and you have the opportunity to bring it into the fold, that makes sense.” Although NCI sells only to carriers and service providers, it will continue to support NewStep’s enterprise applications. It’s “not likely” that version will be folded, he said. Eventually, the two hosted platforms will have to be merged, Crank said.

NCI approached NewStep last fall, he said. NewStep will remain based in Toronto and NCI will absorb almost of its employees except president and CEO Peter Vickers, who joined NewStep in 2008.

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