With recent trends towards free internet access, internet software providers are under pressure to find a new pricing model if they are to survive. Narus Inc, an IP infrastructure company from Redwood City, California, released its first products earlier this year that should enable ISPs and telecommunications firms to analyze in detail internet usage by their customers, enabling pay-as-you-go charging for the first time.
Founded two years ago by CEO Ori Cohen, previously at video streaming over IP company VDOnet Inc, Narus has developed some core technology it calls Semantic Traffic Analysis and used it as the basis for Narus Billing Mediation, a product it released at the end of May. Billing mediation has been used by telcos for voice traffic for years, keeping track of who called who, when, and for how long. In the IP world, the problem is much more complicated, because of the near random routing of traffic over the internet, and by the increasing speed of communications.
Narus uses a network probe attached directly to the backbone that passively looks at the network usage data, analyzes and extracts from it to produce a billable event. It does so at high speed (currently up to 1Gbps Gigabit Ethernet speeds) and without adding latency to the network, according to Cohen. Using the billing application, email usage could be billed at a flat rate, while applications using more bandwidth, such as video conferencing or voice over IP, could each be billed separately on a per-minute or per-destination basis. Pricing for Billing Mediation, which is Unix-based, begins at $50,000.
ISPs want to turn themselves from pure access providers into full service providers, making their money from premium services, says Cohen. He says customers are buying and testing Narus products, but want to keep quiet about it at the moment. That’s partly, perhaps, because the pay-as-you-go internet model is not a popular one with many internet users, who prefer flat-rate charging or believe that internet access should be free. Cohen says that two of the three largest long-distance carriers in the US are Narus customers. Typically, the providers are currently gathering the decision support data, but Cohen believes the new pricing models will begin to emerge onto the market over the next six to twelve months.
With over 50 staff and $30m in funding behind it (the second, $25m round closed last month) Narus says it is now beyond the start-up stage and has made the transition to a small company. It has been striking up partnerships with customer care, billing and order management companies such as Amdocs Ltd, the Solect Technology Group and Portal Software Inc.
Narus is developing other applications around its traffic analysis engine, and has already released Narus Intelligence, a decision support system that turns the data gathered into marketing and operational information.
