Comcast, Verizon Invest in 'Cloud' Network Startup ConteXtream

Comcast and Verizon Communications have opened their checkbooks to a startup promising to let video and broadband service providers save money -- and introduce new applications more rapidly -- using a cloud-based network approach.

The company, ConteXtream, recently raised $14 million in second-round financing, led by Comcast and Verizon, bringing total funding to $29 million.

Its Service Delivery Grid system is designed to "virtualize" network applications, including voice and video, by routing individual subscribers to the best application server based on multiple factors. "By matching subscribers to applications intelligently, operators find it a lot easier to personalize services, and reduce capex," ConteXtream vice president of marketing David Yates said.

Louis Toth, senior managing director of Comcast Interactive Capital, said in a statement, "Comcast has grown by rolling out innovative products and services and giving consumers their entertainment wherever and whenever they want it. We invested in ConteXtream because, by cloud-enabling our network, its Service Delivery Grid can help us continue to deliver exciting new services to our customers in a cost-effective way."

In the cloud approach, a cable subscriber who requested a video-on-demand asset would be directed to the server optimally suited to serve the content at that given time-if, say, the VOD servers in the local system are at full capacity, the asset could be fetched from another site. The ConteXtream system also can intercept incoming Internet-based video and dynamically reshape the traffic to eliminate congestion and optimize the video for specific devices.

The Service Delivery Grid system maintains a global view of all current network and application resources, unlike other network load-balancing servers. That eliminates the need to buy and deploy network hardware probes, according to Yates.

"The grid itself is one entity," he said. "We make one set of application health checks then the grid knows what is going on."

ConteXtream in engaged in trials with four tier-one operators, two of which are cable operators, Yates said. The startup expects commercial deployments with major providers in the first half of 2011.

"Cable operators are on the forefront of transitioning their networks from pipes to clouds," said Yates, who previously was with Cisco Systems through its acquisition of VOD startup Arroyo Video Solutions.

Each of ConteXtream's Linux-based grid servers can manage up to 7 million subscriber-application sessions and up to 40 Gigabits per second. In operator trials, the system has scaled up to 100 million sessions and "terabits of traffic," Yates said.

The privately held Santa Clara, Calif.-based company was founded in 2007 by Sharon Barkai, previously founder and CEO of Sheer Networks, a broadband management system vendor acquired by Cisco.

ConteXtream CEO Yaron Simler, who joined in July 2009, previously was president and CEO of Scopus Video Networks (now part of Harmonic).

The company has about 35 employees. In addition to Comcast and Verizon, investors include Benhamou Global Ventures, Gemini Israel Funds, Norwest Venture Partners and Sofinnova Ventures.