Ogonek (Image source: CENX)
Ed Ogonek is new to his role as the CEO of CENX, one of the first carrier Ethernet exchanges, founded in 2009. A 28-year telecom industry veteran, Ogonek came to CENX from Bridgewater Systems, which was acquired by Amdocs in 2011. He brings a wealth of software and back office knowledge to CENX at a time when it is seeing increased adoption of its software systems by service providers that need help to find Ethernet interconnections with other carriers. During the Metro Ethernet Forum's (MEF) quarterly meeting in San Diego, Sean Buckley, Senior Editor of FierceTelecom, talked to Ogonek about his goals as CENX's new CEO and his perspective on the growing Ethernet services industry.
FierceTelecom: Ed, you were just named CEO of CENX. Can you talk about your initial goals for 2013?
Ed Ogonek: I would say there are three main focus areas from my perspective. One is, we're really at an interesting time in the evolution of the Ethernet industry. It's not a new industry. It's still a very rapidly growing industry, particularly when we look at the interconnect market and the expansion for requirements for interconnect with Carrier Ethernet 2.0, and with cloud or virtualization. First is, how do we make sure we're maximizing the opportunity here? We got a great pedigree with what Nan Chen and Ron Gavillet, as the founders, got started with the company by bringing together the core Ethernet knowledge and some guys that really know how to drive interconnect. The second thing is the natural evolution for the company from being an interconnect service provider to now being an interconnect solution vendor.
As a service provider, I think Nan and the team built a lot of good knowledge of what are the tools and capabilities that we need to be able to interconnect. Now, as I said with that move to virtualization, we have tools that are applicable on a much broader market if we package that as a solution set. And then part three is, as the company has grown, how we can build and scale the company? The third part is putting an emphasis on how we establish the company scale behind that to achieve the first two goals. It's a big order of business, but I think it is appropriate as what we see as the opportunity.
FT: In Ethernet access, a service provider that needs to establish presence in a particular market to serve one of its customers can buy a connection in that market that goes from its market to wherever the customer is. That process seems to be what the carrier Ethernet exchanges are trying to do. What is the difference here?
EO: The first phase of that is delivering the improved quality of experience and improved cost economics for managing the interconnect. The third piece is, how do you come up with more services and revenue to ride on top of that? We're going to assume that other people are going to deal with the physical interconnect.
FT: When you were looking at different opportunities after Amdocs acquired Bridgewater in 2011, what led you to CENX and what interested in you in the potential of this company?
EO: A couple of key things. One is that is it's a business model that I understand very well and have been successful with in the past. In some ways, it has a lot of similarity to what we did in growing Bridgewater. We started at a point where we have got a core product that's just going in with a big operator; we got a good team in place that has the industry knowledge and expertise that we need; and there's an opportunity to come in and put the business infrastructure in place to scale the company. I think that's a good match with where I was. Then, I think there's a massive market opportunity in front of us here with, as we see, not only CE 2.0 but also the whole move to virtualization, driving this set of requirements for interconnect and to some extent a new way to provide the core management software for carrier Ethernet. I think that's the opportunity that we have to be on the forefront of.
FT: What do you think is CENX's core differentiator?
EO: I think the core thing is from really where the company started. It was taking a set of people led by Nan who had that Carrier Ethernet expertise and a set of core people who understand the interconnect market really well and marrying that mindset together. What I will add to that mix is the scale and building the business operations. If I look at the last eight years at Bridgewater, what drove our growth was mobile data. And if I look at a large part of the Ethernet growth market today it is driven by infrastructure for mobile data. Those market dynamics continue to evolve at an amazing pace. I think that mindset will be a good match up to what we're doing.
FT: Since a key piece of CENX's operation is software, could you sell those solutions to other interconnection providers that need it?
EO: Absolutely. Our announcement with CoreSite is one example of here's a cloud infrastructure provider and our software will become part of their solution. We're actively implementing our software with one of the large operators in North America and a couple of smaller operators. We expect that we're going to drive sales directly to the operators and through integration partners or service providers.
FT: Is it a one-time sale that you do or is it a recurring model every time somebody turns up a port?
EO: Yeah, the software licensing model is a flexible model that fits to the needs of different operators at different points in their lifecycle. There's a component that could be perpetual license-based and there's a component that could be a recurring revenue base. It has [to be] set up in a way to be flexible across different applications. Think of a typical OSS hierarchy: We start with inventory and audit capability, grow the ability to do ordering and activation, and do integrated fault management and analytics and capacity planning. Those core capabilities and the pricing model are set up in a way to give the operator flexibility in terms of what they are buying across that set.
FT: Do you interoperate with the billing side of that operation?
EO: In two ways. One is on the activation side. We have to be able to integrate on the billing system that is supporting the underlying Ethernet access service. Then, we also see some opportunities going forward to drive new revenue generating opportunities that operate at a different level than the billing systems around that.