{"id":128,"date":"2010-08-25T14:08:46","date_gmt":"2010-08-25T18:08:46","guid":{"rendered":"http:\/\/blog.worldline.ca\/blog\/?p=128"},"modified":"2013-08-14T10:03:33","modified_gmt":"2013-08-14T14:03:33","slug":"growing-under-the-radar","status":"publish","type":"post","link":"https:\/\/www.worldline.ca\/blog\/growing-under-the-radar\/","title":{"rendered":"Growing under the radar"},"content":{"rendered":"

\"Trio\"<\/a><\/p>\n

Ever hear of Fibernetics Corp.? No? Reaching some 85% of Canada\u2019s population, it is one of Canada\u2019s largest by-footprint telecom providers. Still not ringing a bell? Don\u2019t worry, you\u2019re not alone.\u00a0\u201cNobody knows about us,\u201d John Stix, co-founder of Fibernetics, told the Financial Post in an interview. \u201cBecause if you think about how\u00a0we’ve\u00a0grown,\u00a0we’ve\u00a0grown under other people\u2019s brands so\u00a0we’ve\u00a0kind of been\u00a0flying under the radar.\u201d<\/p>\n

In just 15 years, Waterloo, Ont., natives Mr. Stix and Jody Schnarr, who launched Stratford Telecom in 1994, have turned an add-on long-distance service provider run by three people in a basement into a full\u00a0service-telecom provider with a national infrastructure, more than 150 employees and offices in three countries. And they have made millions in the process.<\/p>\n

How did Fibernetics manage to become an industry leader without anyone noticing?<\/p>\n

Mr. Stix and Mr. Schnarr worked at NorthPhone, a now-defunct discount long-distance provider, but decided to go it alone at age 24. \u201cWhat we did know was that we\u00a0didn’t\u00a0like working with other people, and\u00a0since NorthPhone ended up not doing so well we ended up finding a switch provider and starting out on our own.\u201d<\/p>\n

They convinced Bill Miller, then TD Bank branch manager in Stratford, to approve a $15 000 loan to buy their first PC-based switch. \u201cIt was a tremendous amount of money for us back then,\u201d Mr. Stix said. \u201cBut\u00a0we were realizing that if we could move past per-minute long distance with a focus on flat rates, then we could be a leader at that time.\u201d<\/p>\n

They started by offering unlimited long distance between New Hamburg (an even smaller suburb of the small town of Stratford) and Waterloo for $9.95 a month, compared with Bell\u2019s 24\u00a2 to 34\u00a2 a minute for the\u00a0same calls. Despite the clear advantage in cost, people were reluctant to switch their long distance plans to an untried service.<\/p>\n

\u201cAfter a month we had 75 people switch, giving us about $1,400 worth of payables and $800 worth of receivables and we\u2019re thinking we\u2019re going out of business,\u201d Mr. Stix said. The threat of\u00a0bankruptcy\u00a0forced the\u00a0two to get innovative. They realized their switch could handle about 4,000 calls a day without increasing their costs, and from there began determining how they could offer free long distance to Stratford residents\u00a0and, as Mr. Stix said, \u201cmaybe someone else would like to take the credit for doing so.\u201d<\/p>\n

The owner of the neighbourhood General Motors dealership stepped up to cover\u00a0the costs of the service in exchange for a short advertisement for his dealership to\u00a0be played before a call was connected. From an advertising perspective it was\u00a0brilliant. But from a self-promotion perspective it was\u00a0disastrous, as customers\u00a0would\u00a0scarcely\u00a0hear the name of the telecom provider.<\/p>\n

\u201cOn the first day our switch maxed out, basically we went from about 75 people\u00a0making about 75 calls per day to 4,000 people using it within 24 hours,\u201d Mr. Stix\u00a0said. \u201cWe had to scramble to get more facilities in because it immediately ramped\u00a0all the way up to 8,000 calls per day.\u201d<\/p>\n

Stratford Telecom had no trouble finding sponsors in independent pockets across\u00a0Ontario to cover the overhead in exchange for free advertising, there was even a\u00a0real estate agent in Newmarket who ended up including the tactic in a series of\u00a0audiotapes he created on how to be a successful real estate agent. But customers\u00a0were still unaware of exactly who was providing the service. \u201cPeople still\u00a0didn’t\u00a0identify our brand Stratford Telecom because they were always identifying it by
\ntheir local calling area, which was sponsored by a local advertiser,\u201d Mr. Stix said.<\/p>\n

However, the plan was to connect all the local calling areas in Ontario (and
\neventually the rest of Canada) together. But to do so would be too expensive if the
\ncompany had to keep paying Bell to use it\u2019s infrastructure. With the world wide
\nweb just coming into the mainstream, Mr. Schnarr and Mr. Stix hatched an idea to
\nprovide regular long distance service at a fraction of traditional costs, which would
\nuse voice-over internet protocol [VoIP] technology.<\/p>\n

\u201cIn Canada, we believe we were the first guys to channel a VoIP call from a phone\u00a0to another phone without needing an internet connection or a computer,\u201d Mr. Stix\u00a0boasted. \u201cThat call originated from Waterloo to Toronto and sounded awful,\u201d he\u00a0said.<\/p>\n

Call quality aside, the idea took off and later that year the pair landed a very big
\nsponsor: Labatt Brewries. From that came the Labatt Blue Line, a VoIP-based
\nadd-on long-distance service that allowed users to make free calls between any
\nmajor Ontario communities in exchange for listening to a brief ad for Labatt beer. According to Mr. Stix, the promotion was meant to last only one summer, but after quickly attracting more than 300,000 users it\u00a0ended up running for 14 months. \u201cBig, big, big success story for us and for them,\u201d Mr. Stix said.<\/p>\n

Their success attracted so much attention a company offered to purchase Stratford Telecom for $7.2-million in 2000. The co-founders, barely 30 by then, were happy to accept a multimillion-dollar opportunity for\u00a0ultra-early retirement. \u201cAfter six months, both Jody and I were bored and we had an incredibly compelling feeling that we didn\u2019t finish what we were supposed to do,\u201d Mr. Stix said. \u201cWe learned the lesson a lot of\u00a0entrepreneurs learn, which is never accept your first offer because you sell too early.\u201d<\/p>\n

They aggressively re-entered the telecom field after their non-compete clause ended in 2002, launching 295.ca in early 2003. The service provided unlimited dial-up internet access for $2.95 a month. \u201cWe could\u00a0have come up with unlimited dial-up for $9.95 per month, but we would not have gotten the mass adoption,\u201d Mr. Stix said. \u201cWe were doing 150 sign-ups per day, which for dial-up was incredible.\u201d
\n<\/span>
\nIf they could acquire enough customers, the company could apply to become a competitive local exchange carrier, the CRTC designation given to telecom providers that have enough market share to support an\u00a0autonomous infrastructure. At the time the company was paying Rogers upward of $100,000 a month to use its VoIP infrastructure, so getting CLEC status would mean major cost savings, as well as respect among\u00a0the telecom giants.<\/p>\n

The pair set about building companies that would generate the revenue needed to reach that status. 295 was doing well with such an aggressive price point (other companies charged $15 to $20 a month for the same\u00a0service), but they needed to go further. In 2004 they launched WorldLine, a pioneer of VoIP phone-to-phone services in Canada. Building off the 295 brand, WorldLine offered unlimited long distance in Ontario\u00a0for $2.95 a month. With as many as 300 families a day signing up for the no-contract add-on service, it was attracting sponsorship deals from major media outlets such as Sun Media, Astral, Chorus and\u00a0<\/span>Transcontinental in Quebec.<\/p>\n

\u201cLo and behold we were growing exponentially and into other provinces,\u201d Mr. Stix said.
\nBy mid-decade Fibernetics was incorporated, with its subsidiaries 295.ca and WorldLine sporting a combined customer base in the tens of thousands. Clearly, the next expansion needed to be in customer service. A\u00a0brief failed experiment in Kitchener, Ont. was followed by the the opening in 2005 of the 60-seat Fibernetics Call Centre in Puerta Plata, Dominican Republic, which the company plans to expand to 150 seats.<\/p>\n

\u201cIt was a good choice because it was the same time zone, they have French from Haiti and Spanish as well which is great because we\u2019ve always dreamt of expanding into the United States,\u201d Mr. Stix said. Later that\u00a0year, Fibernetics request for CLEC status was approved.<\/p>\n

After taking on their first-ever investment from Toronto venture captialist Howie Fialkov, the company invested in a series of meta-switches that allowed Fibernetics to generate its own dial tone, provide 911\/411\u00a0service, \u201cbasically everything that a full-fledged telecom provider can do,\u201d Mr. Stix said.<\/p>\n

The massive savings from no longer paying incumbents like Rogers and Bell to use their facilities made it possible for Fibernetics to build a software development division in Bulgaria and staff it with 12 full-time\u00a0programmers. \u201cWe need our own software because now we have more than 100,000 customers and our own network is growing very rapidly, so we\u2019re plugging in infrastructure as fast as we possibly can.\u201d<\/p>\n

The Fibernetics network runs west to Vancouver and east to Quebec City, although Mr. Stix has plans to be in Halifax and St. Johns soon.<\/p>\n

With the 2009 launch of a commercial PBX phone service for businesses, Fibernetics Corp. is showing no signs of slowing down. \u201cIt has been a complete game-changer for us, we\u2019ve become the gold standard, the\u00a0Google of telecom,\u201d Mr. Stix said. He has a plan to launch a service this fall that he said will abolish the need for long-distance plans for cellphones in Canada.<\/p>\n

Financial Post<\/strong>
\n jberkow@nationalpost.com<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

Ever hear of Fibernetics Corp.? No? Reaching some 85% of Canada\u2019s population, it is one of Canada\u2019s largest by-footprint telecom providers. Still not ringing a bell? Don\u2019t worry, you\u2019re not alone.\u00a0\u201cNobody knows about us,\u201d John Stix, co-founder of Fibernetics, told … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-128","post","type-post","status-publish","format-standard","hentry","category-worldline"],"yoast_head":"\nGrowing under the radar - Worldline Canada<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.worldline.ca\/blog\/growing-under-the-radar\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Growing under the radar - Worldline Canada\" \/>\n<meta property=\"og:description\" content=\"Ever hear of Fibernetics Corp.? 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