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Coal lay in ledges under the ground since the Flood, until a laborer with a
pick brought it to the surface. We may well call it black diamonds, for
every basket of coal is a portable climate. Coal carries coal, by rail
and by boat, to make Canada as warm as Calcutta.”
— Ralph Waldo Emerson, Wealth, from The Conduct of Life 1860
The Amazons and Facebooks of the world can live off fresh innovation and short term experiments. They can do that because their wealth is based on ethereal stuff like consumer fashions and the output of coffee-fueled programmers.
Telecom is a much different world that lives by the laws of long arithmetic. Huge capital investments are made over several years to build a stable business.
Telecoms don‘t shun innovation per se, however, the 24/7, five 9’s nature of communications grooms a more methodical, well-grounded way of thinking. And being naturally careful and cautious, they need trusted guides and partners to help them explore new frontiers.
Since 1999, Iristel has built a successful wholesale business doing just that: providing innovative networking solutions to operators (large and small) across several technical domains. At the recent Capacity North America conference in Toronto I met Iristel’s founder and CEO, Samer Bishay, who explained to me the market-adaptive techniques he’s used to grow a successful business of trust.
|Dan Baker, Editor, Top Operator: Samer, reading about Iristel on your website, it’s pretty apparent Iristel walked down quite a few “less traveled” paths to succeed. Can you explain how Iristel got started?|
Samer Bishay: Happy to, Dan. I started the company 17 years ago out of my small apartment in Montreal. Basically, we were a VoIP network in the era of AOL dial-up modems.
In 1999 and I read a prophetic magazine story saying how voice, data, and everything was going to be riding over the internet. This was leading edge thinking back then: even Cisco was not yet doing voice over IP stuff.
Ironically we got our first start in Africa. TDM circuits were very expensive there, so satellite was the way to go. And we developed an IP compression technique to get four channels across only one satellite circuit. Achieving that 4:1 ratio at the same cost allowed a 50% margin on the circuit.
We offered the service wholesale in the Ivory Coast, Cote d‘Ivoire Telecom (part of France Telecom back then) and they gave us thousands of orders each month, fulfilled though our servers in Montreal.
Sadly, years down the road, Africa became too politically volatile: there was a military coup in Ivory Coast, for example. And often, since telecom is a big income generator in Africa, when there’s a change of power, the first person the new ruler hires as his telecom minister is a buddy of his. So vendors like us, who are not politically connected, are the first to go.
|But that allowed you to jump into your home market of Canada.|
Yes, Canada was originally an afterthought for us, but all our equipment and servers were here, so in 2003, I applied for my first CLEC license here and started in Toronto.
What began with one rate center eventually mushroomed into the 2,000 rate centers we have today. Still we are the only CLEC in Canada who covers all 10 provinces and the 3 territories — all the way up to the shore of the Arctic Ocean, and a place called Tuktoyaktuk.
|How could you afford to build out thousands of all these rate centers?|
Our secret was loyal anchor tenants, who said, “Oh yeah, if you build there, we will buy from you.” That’s how we leapfrogged the country. From Toronto, we went to Montreal, which allowed Vancouver to open up, and that led to Calgary in Edmonton. So we grew one rate center at a time.
Another unique point is we own our own facilities. We are actually the only CLEC in Canada who doesn‘t buy aggregate capacity from another CLEC: it’s our own network, our equipment, and it’s across all 10 provinces and 3 territories.
In Arctic regions, like the Yukon and Northwest Territories, none of our competitors are there. And how did we get there? We acquired a company called Ice Wireless, one of the very few MNOs in Canada. And Ice Wireless sells roaming access to Rogers. We also have Videotron, Wind, and Eastlink. All of these carriers reach Arctic Canada through Ice Wireless.
Through Ice, we gained the footprint to complete our CLEC offering across the Arctic. This is how we can boast having full coverage across the country.
|What’s the deal with so little MNO activity in Canada? In the US there are probably 250 MVNOs operating.|
Yes, the Canadian market for MVNOs is about 10 years behind the US in terms of openness. Bell will never sign anybody up as an MVNO. In Canada, there was no MVNO — until we created Sugar Mobile, a brand of Ice Wireless. Luckily we found a regulatory hook that permitted us to offer MVNO service.
Of course, people here are still fighting to shut us down, but being innovative and disruptive in this market is something we’re quite proud of.
|What’s the attraction of your CLEC business?|
Dan, it’s very simple: the CLEC infrastructure we built enables others to come and layer their services on top.
So imagine a company like Magic Jack in the US that allows you to buy a VoIP retail device from an office store and the provision free long distance across the country.
Think how hard a service like that would be to launch in Canada. You would have to buy from several providers and aggregate all that and deal with local number portability issues. It’s all very messy. But that’s the kind of capability we offer, with many options: they can get long distance service, but also mobile, SMS, and nationwide coverage.
This capability has allowed us to win some key deals: some we can disclose, others we cannot.
Essentially we give our wholesale customers a platform — or middleware, let’s call it — with APIs that allow you to look into your back-end and provision all the services within minutes on a national level.
So that capability is eye-candy for incumbent guys like Allstream. In fact, all the big carriers are customers because we give them a platform to automate their own network: they avoid spending years developing their own solutions. We basically turned a hardware problem into a software solution.
If an incumbent wants to enter a new territory where they lack footprint — or maybe they have footprint but no IP overlay — they access our API and we provision the service for them.
Now this is all next gen stuff. The incumbents are already experts in TDM. However, the next gen network might still take them years to fully develop, say, to upgrade 100 switches across the country. That alone could cost them hundreds of millions, so why not outsource that to guys like us?
|Great insights, Samer. To close, I’m curious where you see the Canadian market headed? And where will opportunities lie for a company like Iristel?|
Well, there’s certainly going to be more consolidation in Canada: we’re already seeing that.
Canada is quite a bit different than the US. Innovation is less welcome here: people are more comfortable sticking with the tried and true.
For instance, Toronto has long had the 416 area code. And when the 647 area code arrived several years ago, people panicked. Even today, people don‘t want 647 numbers or even the new 437 number. But in markets like San Francisco and New York, people are quite comfortable with 10 area codes.
When it comes to raising money, Silicon Valley is obviously a magnet in the US. Here, the market is much more protected. Part of that is because people are less mobile: people who grew up in Toronto want to stay in Toronto.
So getting back to your question, Iristel is doing well because we stay two steps ahead of the competition. We have ventured into tele-health. Next year we are launching a nano satellite constellation, and to fund that, we got money from the Valley.
IoT is another capability we built into our middleware platform. People can even deploy M2M using a satellite. And the beauty of that is it gives them independence: no need to rely on another partner or plunk down lots of money for integration.
So at Iristel, we’re quite comfortable developing and offering disruptive applications. Staying ahead of the innovation curve and helping incumbents solve some very big problems: those are good places for us to be.
Copyright 2016 Top Operator Journal