Washington D.C. -- Wedge Networks, a cloud security startup based in Calgary, Alberta, this week launched Cloud Network Defense, a cloud-based security platform that uses deep packet inspection (DPI) to provide anti-malware and security services in the cloud.

Wedge has a unique business model. Rather than being sold as a separate security appliance or even software package, Wedge works with service providers to set up a security cloud service, and then takes a cut of the revenue that the operator generates from selling cloud security services. The target customer is Small and Medium Businesses (SMBs), who don't want to hassle with installing their own security software or services.

Wedge does this by running the security services as Network Function Virtualization (NFV) on standard server hardware, hosted on a service provider's networks. By running as a cloud service, the customers can order anti-malware, anti-spam, parental control, and other services controllers by calling the service provider, which can instantly provision the service.

"Our approach is behavior-based using sandboxing and running in the cloud," said Hongwen Zhang, CEO of Wedge. "The service providers do not appreciate network traffic going out of their network. Our approach is to giving them tools to make sales."

The company's products run on the WedgeOS, which is a cloud platform that handles all the elements of delivering a security service for service providers, including provisioning, billing, and management. Its security products address virus protection, data loss, anti-spam, PCI compliance, IDS and IPS, and other security services.

Wedge was founded in 2002, based work of co-founders Zhang and Husam Kinawi, who were researchers at  the University of Calgary. Zhang said in an interview that the company has the equivalent of 50 full-time employees spread between Calgary, Dallas, China, and offshore development offices. The company has received some angel funding but not traditional venture capital financing.

Wedge launched its product here at the Metro Ethernet Forum's (MEF) GEN14 event, where service providers explore new technology and offerings. Wedge officials said that the big move to cloud services and Ethernet linking them together is a benefit to their technology

"In the three years, 70% of Ethernet ports will be in the cloud, it's the new paradigm of networking, said Zhang. "The technolgy includes security."