Startup of the Week / Helping the Little ISP in Uganda

The mushrooming use of data-heavy websites like YouTube and services such as Skype (not to mention the oceans of illegally downloaded films and TV shows) don't concern consumers. They have no restrictions on bandwidth. But they're a big headache for Internet service providers.

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Unlike private customers, ISPs must pay for their international traffic volume. In Israel, there are three companies with international cable networks that sell worldwide Internet access to ISPs.

But many countries have only one provider, so traffic prices are high. What can a small provider in, say, Uganda, which has no alternative to buying an internatoinal link from Uganda Telecom, do?

The Israeli startup DiViNetworks has set out to make the cost of international links more affordable for companies like that.

“The company came about from an Internet compacting solution and volume conservation. We realized that communications operators pay a great deal for international lines. The company’s first product was a simple encoder/decoder box that was placed at each end of the network and compacted traffic,” says DiViNetworks’s CEO, Barak Avitbul. “But since then, we’ve gotten into the cloud — providing the same capabilities based on the cloud network.”

How does it work?

“We’ve placed servers all over the world. We sit at the major junctions of the Internet, such as Hong Kong, London and Frankfurt, and are connected directly to major services such as Google and Facebook,” says Avitbul. “It’s a worldwide network, only we don’t have our own lines. We use existing lines, and the traffic that goes through the network is compressed. It’s a software layer above the physical network that makes it smarter. Since it’s a cloud-based solution, the next stage is adding more services to the network — compression is only the beginning.”

Avitbul says his company can connect to networks like Uganda Telecom and provide its own line on top of it, generateing 30% to 50% more traffic. “On the supplier’s side, it has to install our server, but it’s a box we send via Fedex, and any engineer can set it up in an hour,” he notes.

The compression the company provides is based on a principle of deduplication: the network does not transmit the same content twice. Instead, it conserves international traffic by saving popular Internet content on the nearest server.

The World Bank liked the idea that ISPs could pay less for international traffic, which could also bring down the cost of the end-user’s subscription. Recently, DiViNetworks completed a financing round in which it raised $10 million, half of which came from the International Finance Corporation, the World Bank’s investment fund. Since its establishment, DiViNetworks has raised roughly $15 million, most of it from private investors.

Like many Israeli startups, DiViNetworks has gone through several incarnations, as Avitbul recalls. “We started in 2004 and began selling our basic product in 2009. We started with the current cloud-based solution in 2012, and we have more than 100 paying customers. Payment is performance-based — only according to the amount of traffic we add to the ISPs’ networks.”

DiViNetworks has 30 employees, who work from the company’s offices in Tel Aviv.