It seems like yesterday - actually four years ago - when Brian Tobin was running around with a $4-billion "new national dream" to deploy broadband to all Canadians by 2004 to support the agenda of an organization called the Canadian National Broadband Task Force. You know what Ottawa did? Nothing, nadda, zip? Instead, it has been the provinces that carried out the agenda - particularly in Western Canada where Alberta built the SuperNet project and, more recently, B.C. where the government and Telus are rolling out broadband to rural communities. Nevertheless, the federal government is still talking the talk about improving the country's "broadband infrastructure".  Earlier this week in Toronto, Industry Minister David Emerson said he's seeking more funding because Canada's competitive edge in broadband is eroding and he wants to make sure we don't fall behind. That's a fine statement but how much money does Ottawa think it needs? And who's going to operate these networks? As well, I haven't heard Finance Minister Ralph Goodale talk about broadband funding, which is unlikely to be a major election issue next spring. If Emerson wanted to be more effective, he'd work on getting the wireless carriers to introduce number portability a lot sooner than mid-2007.

Clearly, a major service outage last week did little to spook  the VCs who have decided to put $25 million into SunRocket. The company, which describes itself as "the second fastest growing independent provider of residential Internet phone service", has tapped Mayfield Fund, Doll Capital Management and its existing investors - BlueRun Ventures and Anthem Capital Management. SunRocket has now raised a total of $34-million. “SunRocket is poised to explode as a household name in a category that is transforming consumer telecom, and we couldn’t be more enthusiastic about the opportunity,” gushed Dixon Doll, co-founder and managing general partner of Doll Capital. (Update: Doll Capital is also leading an $8.75-million Series A investment in BitTorrent)
Not sure how to read the SunRocket investment. It may suggest investors are emboldened (enamoured?) by the eBay-Skpe deal and still believe there is room for independent VOIP service providers amid the cable and carrier giants. One key would be valuation and the ROI formula. If the VCs are getting a big chunk of SunRocket for a relatively modest amount of money, making a bet on a VOIP service provider may have much less risk if the market continues to grow as expected. Then again, if you think Vonage is about to get squeezed out of the VOIP market, what are SunRocket's chances?
Just out of curiosity, I checked out Mayfield's other communication service investments. They include Mobile365, which offers wireless access and content distribution, and MobileAria, which develops mobile technology for fleet management and security services. Doll's communications investments include InterNap, which providesr usiness customers high performance IP services through a portfolio of Internet-based solutions, and Neutral Tandem, an independent provider of inter-carrier transit and switched access services.

 

Om Malik has a post this morning on a Financial Times report that Vonage's two lead underwriters - UBS and Deutsche Bank - have been secretly telling the company a better option may be a “parallel process” - which means they would pursue an IPO and the sale of Vonage at the same time. Doesn't exactly give you confidence in the IPO, does it? Given the speculation about the IPO, it was puzzling to hear Charles Lax, managing director with GrandBanks Capital, talk about Vonage having a $10-billion valuation based on what eBay paid for Skype. The crazy part is that no one challenged him during two VOIP/VC sessions on Fall VON. How Lax does the math is a mystery given the talk is Vonage will have a valuation of $1-billion to $1.5-billion. A $10-billion is near-impossible unless Vonage sells a 6% stake for $600-million. Maybe Lax was trying to spice up his sessions but he either knows something or he should know better. I continue to get the feeling Vonage has lost its buzz and that the timeframe for it to do an IPO is shrinking as the U.S. cablecos become aggressive about telephony and make bigger strides in terms of attracting customers.