The Oceanport, N.J.-based company is among numerous networking start-ups creating new technology to take advantage of pent-up demand from network operators such as WorldCom and Williams Communications for higher-capacity equipment for their fiber-optic networks.
The market for new optical networking technology is expected to grow from $8 billon in 2000 to $50 billion in 2004, according to Pioneer Consulting.
Privately held Tellium has an existing $250 million equipment contract to supply technology to Extant, a network operator recently acquired by Dynegy. The new equipment is being tested by Extant, according to Harry Carr, Tellium's chief executive. Carr said to "stay tuned" for upcoming announcements of other customers.
The new switch, called the Aurora Optical Switch, offers a 16-fold increase in capacity over the company's previous model, according to the company. In other words, Tellium's latest technology can send larger amounts of data at once and at higher speeds of up to 1.28 terabits per second.
It also doubles the density of the equipment, meaning that more capacity is built into a smaller switch, which is helpful for space-constrained communications companies.
The new switch will compete with Ciena's CoreDirector switch, Sycamore's high-end 16000 switch, and Cisco's new wavelength routing device, culled from the acquisition of Monterey Networks. Others, such as Nortel Networks and Lucent Technologies, are developing similar equipment.
The company is developing another new switch called the Aurora Full Spectrum switch, scheduled to ship sometime next year, that combines optical technology with more pervasive electrical technology, allowing a network operator to choose between the two methods of transporting data. In general, electronics slow down data traffic flows, but add more sophisticated management techniques.
Tellium is thought to be another candidate for an upcoming initial public offering, particularly after the recent success of Corvis, another optical networking company. Corvis jumped 135 percent when it went public in July despite having recorded no revenue.
Carr declined to comment on any plans to go public.