NEWS: AI-Powered Software Company Aiming to Alleviate Cellular Congestion Seeks $3.5 Million

Homayoun Yousefi’zadeh, CEO

Consider a daily rush hour scenario in the carpool lane of the 405, with congested cell tower service that results in either continually dropping calls or preventing streaming video into passengers’ cell phones.

This underscores the challenge of providing uninterrupted coverage. Cellular congestion occurs on a daily basis in metro downtowns and venues hosting special events, like concerts and sporting events. It can be a major source of frustration for subscribers leading to churn, aka subscriber loss.

A startup, with HQ in Irvine, is working to alleviate this congestion by providing more cellular capacity – via its artificial intelligence-powered software – for the 3G, 4G, and 5G networks, as well as the internet of things (IoT).

In 2016, Homayoun Yousefi’zadeh (CEO) and Amr Albanna (president) co-founded CellOnyx to optimize cellular capacity. (The name comes from combining the word “cell” to reference its industry segment and the word “onyx,” a banded variety of oxide minerals, to highlight the banding characteristics of its software) after conducting nearly two years of research at UCI. The team consists of scientists and engineers with decades of experience in the cellular industry, supported by executives in this industry.

Financing

The company has raised $175,000 to date. It’s currently seeking $3.5 million based on a valuation exceeding $5 million. The capital raised will be used for general and administrative expenses; operations, marketing, and R&D over a span of three years, during which the company aims to reach profitability.

Although an IPO path exists after reaching profitability in about three years, a potential exit is more likely through an acquisition by one of its customers in the mobile operator or cellular infrastructure segments, Yousefi’zadeh said.

Market Size

CellOnyx is targeting a $20 billion global market, according to published reports of the cellular industry. Typical services offered in the cellular industry to mitigate congestion include carrier additions, site additions, small cell additions and distributed antenna systems.

Adding a new carrier can cost somewhere in the range of $100 million, with a lead time in the range of 12 to 24 months for a metro area the size of downtown L.A.

Other alternatives cost approximately $500,000 to $2 million, with typical deployment times of six to 24 months.

“In comparison, CellOnyx’s solution costs a small fraction of alternative solutions and can be operational in less than a week,” Yousefi’zadeh said.

Business Model

Its business model is SaaS (Software-as-a-Subscription), with license cycles of approximately two years. Potential customers include mobile operators such as Verizon, AT&T, Telefonica, and Vodafone, as well as infrastructure providers like Cisco, Ericsson, Qualcomm, and Google.

CellOnyx has released a product in a live network trial with a major U.S. mobile operator in the greater Los Angeles area.

Patents and Licensing

The company has two patents, which were originally developed at UCI and subsequently licensed back with exclusive rights.

UCI has a 3% equity stake in CellOnyx and receives a royalty of 3% of net sales per license. UCI can purchase up to 5% securities issued per financing round and 20% of the sub-licensing revenue of the patents goes to UCI.

Networking

5G is the fifth-generation and latest version of cellular technology, engineered to exponentially increase the speed and responsiveness of wireless networks.

The IoT is a network of physical devices, vehicles, home appliances and other items embedded with sensors and connectivity capabilities, which enables them to connect and exchange data.

How It Works

CellOnyx addresses what’s known as “load-balancing,” which has been widely adopted in different branches of the high-tech industry, ranging from enterprise networking infrastructure to cloud infrastructure using virtual machines. Performing load-balancing is complicated, Yousefi’zadeh said, as it requires the processing of domain-specific knowledge in real time.

“Simply put, CellOnyx technology makes load-balancing of cellular infrastructure a reality utilizing cutting-edge AI technology,” he said.

Built on iSON (an AI-based, self-organizing network) technology, CellOnyx products enable mobile operators and cellular infrastructure owners to offload their excess load of cell towers experiencing congestion to neighboring towers with spare capacities. This results in the most efficient use of existing cellular infrastructure.

Product Release

CellOnyx released its 3G software in 2016 and its 4G product last year. Each went through a private beta test prior to its release.

It plans to release its 5G product in the second half of this year. This will support LTE-A standards. (LTE-A is short for LTE-Advanced. It’s a standard for mobile communication that is one generation beyond LTE (Long Term Evolution)).

In the first half of 2019, it plans to release a new product supporting the “seamless” offload between Wi-Fi and cellular networks.

“(This) will be more than likely of high interest to companies such as Google and Facebook, (which are) already heavily investing in infrastructure solutions in this space,” Yousefi’zadeh said.

Foundation

Most recently, Yousefi’zadeh was a chief technologist at the Boeing Company and the founder/CTO of TierFleet in Santa Ana. He is also an adjunct professor at UCI. Albanna was the founder/CEO of Omega Wireless in Aliso Viejo and a director of engineering at T-Mobile.

Advisory Board

CellOnyx’s advisory board includes Brian Jones, the former president of Airtouch Cellular (now Verizon) and Ron Buschur, the former CEO of Powerwave, which was a global telecommunications corporation in Santa Ana, with products designed to amplify coverage, capacity and data speed in wireless communications networks.

About The Author

Deirdre Newman is a long-time journalist, who's covered OC startups for a few years.

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