The Big Idea at Acme Packet: Smoothing the Way for Voice and Video on the Internet

7/23/09Follow @wroush

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end-to-end communications became network-edge-to-network-edge, where all signaled media terminate and reoriginate at the borders between networks,” Ory says. Acme labeled these way stations “session border controllers,” or SBCs—and invented an industry in the process.

SBCs turned out to be crucial components for telecom companies that wanted to help their big-business customers scrap the PBXs (private branch exchanges) connecting them to the old public circuit-switched telephone network, which managed data using a system called time division multiplexing (TDM), and replace them with cheaper, more agile communications networks based on packet switching and the Internet Protocol. At least 10 other companies sprang up between 2000 and 2005 to sell the devices. But only two or three SBC makers had the stamina or vision (or both) to survive to the present as independent companies, including Acme.

It turns out that big technological disruptions, like the change from circuit-switching to VoIP, take a lot longer to play out than entrepreneurs would like to imagine at first, Ory says. “On August 3, we’ll be nine years old, and we’re still just at the starting line,” he says. “Talk about the benefits of being naive—if you told me nine years ago that this was going to take nine years, I would have said ‘I’m doing something else.’”

But he didn’t. Which may not be surprising, given his history of perseverance in the Boston-area telecom sector. After growing up in Worcester, MA, and getting an undergraduate degree in visual arts from Harvard, Ory joined Boston Technology, an early maker of voicemail software, in 1988. (That’s where he met MeLampy, as well as colleagues who went on to found a passel of Boston tech companies, including Atria Software, ClearCase, and Art Technology Group. “There was a Boston Technology reunion recently, and it’s unbelievable what came out of there,” Ory says.) He left a couple of years later to start Priority Call Management, using his father’s life savings as capital. (Robert Ory, aged 76, is now an executive at Acme.)

Priority Call Management started out selling programmable switches to telephone companies, then grew into a provider of single-number services that routed all of a person’s calls to one phone. Unfortunately, “People weren’t ready for one-number services in 1997, 1998,” Ory says. “Basically everything we did, GrandCentral did later.” (GrandCentral is now Google Voice.) So the company morphed again into a provider of pre-paid wireless calling services. That made it attractive to a company called LHS Group, which bought it in 1999 for approximately $200 million.

Ory says that after the sale of Priority Call Management, he thought he would have some time off. But in July of 2000, MeLampy called to say he wanted Ory’s help starting a business around SIP—the Session Initiation Protocol, which had just been accepted by telecom standards bodies as a way to control multimedia transmissions such as voice or video calls. (A session is any interaction requiring the creation of a semi-permanent path through the Internet to smooth communications.) “I said sure—you take the technology and engineering side and I’ll take the business and sales side,” says Ory. “Everyone showed up at my house, we put a whiteboard on the kitchen wall and some folding tables on the porch, and started inviting guys to come join us.”

They could see that new software and hardware would be needed to set up SIP-based sessions that traversed multiple private networks, and they set out to build it. This being the bubblicious days of 2000-2001, the company was able to line up the Menlo Ventures investment within only a few months. (It helped that Menlo had funded Primary Call Management and regarded Ory as a good bet.)

But then came the company’s real challenges. First, there was the “nuclear winter” of the March 2001 dot-com crash, which hit the telecom sector especially hard and sent the company into a … Next Page »

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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