Chris Amendola and Dan Armstrong remember crouching, crawling and wriggling through a series of dusty brick tunnels beneath their office in an old carpet factory in Toronto's Liberty Village.
IT consultants by day, the duo spent their nights dragging fibre-optic cables behind them, wiring up neighbouring businesses that had asked them to arrange Internet access.
"I took a crash course in splicing and terminating these cables and we ran them to connect up all the buildings in our complex," Mr. Amendola says, recalling their trips through the dingy tunnels that fanned out from under the factory to a handful of surrounding buildings and housed scorching steam pipes leading from a central boiler room.
It was the late 1990s and those after-dark journeys were the unlikely beginnings of Beanfield Metroconnect Inc., which was tapping into exploding demand for faster Internet at a time when the shift from dial-up to high-speed fibre was taking shape.
Today, Beanfield is making an increasing mark on the telecommunications sector in Canada's biggest city. Already selling fibre-optic-based telecom services to businesses in more than 600 office buildings (mainly in the Greater Toronto Area but also in Montreal), the company is taking aim at a new target: the home. Beanfield Internet, television and home-phone services are available in more than 100 GTA condominium buildings and the company has plans to move into another 50.
While Beanfield remains tiny in comparison to the major cable and telephone operators, it is tapping into the huge and still growing demand for high-speed data services – the same demand that is prompting BCE Inc. and Telus Corp. to invest billions to upgrade their legacy copper wires and bring fibre directly to customers' homes. Cable companies are upgrading, too – though through less expensive investments – in a bid to improve speeds as the industry focuses on Internet customers as the new key to growth.
"You can draw a direct line – a solid line, not even dotted – between the success of this company [Beanfield] and why Bell Canada and Telus are pushing fibre to the home," says Greg MacDonald, head of equity research at Macquarie Capital Markets.
He says the downtown, condo-dwelling crowd, with more millennials in the mix than other parts of the city, is likely to embrace an option such as Beanfield, which provides fast Internet service at prices that aren't necessarily cut rate, but offer good value on a per-gigabyte basis.
"They are very sophisticated on what they pay for data and happy to go online and find what they want," Mr. MacDonald says, noting many younger consumers don't subscribe to traditional television services.
Beanfield spent the first decade of the 2000s building its commercial fibre network, focusing on low-rise, "brick and beam" office buildings west and east of Toronto's downtown core before later moving into the financial district. Without bank financing at the time, the Beanfield team reinvested profits and slowly built their network, intent on controlling their own infrastructure "from end to end."
Mr. Amendola (who is president of Beanfield, while Mr. Armstrong is CEO) says the company didn't plan to move into residential services. That changed after they won a contract to supply broadband to the Waterfront Toronto development in 2011, a deal worth about $100-million to the company over 20 years, based on initial projections.
Beanfield has an agreement to provide high-speed Internet for $60 a month to every resident of certain Waterfront Toronto buildings, including the recently occupied Canary District condos, which previously housed athletes during the 2015 Pan/Parapan American Games. But Beanfield also moved into other buildings in the meantime and in most places it competes with BCE and Rogers Communications for business.
And Beanfield is dialling up its competition in the marketing arena, as well, hiring an advertising agency for the first time this year. Mr. Amendola says word of mouth and goodwill help the company win about 30 per cent of the customers in each new condominium building it enters, usually reaching that milestone within two years of offering service. But he has bigger ambitions.
"People hate Bell and Rogers so much, I think we should have 50 per cent. I think there's a group of people we're not reaching and we're hoping the marketing will fix that."
Beanfield's traction has attracted attention from BCE, which responded over the summer by parking trucks – equipped with pizza ovens – outside buildings where Beanfield provides service, offering residents warm food and low prices to lure them away from the upstart competitor.
BCE spokesman Mark Langton says the company often promotes its Fibe Internet and TV through on-site demos and uses the pizza truck-tactic in locations where it can't access a building's lobby or party room.
"[The events] usually include pricing promotions for new customers, people switching from a competitor. We'll always be competitive versus rivals big or small," he says.
Despite the increased competition in a swath of downtown Toronto, Beanfield isn't likely to represent a serious threat to its larger telecom competitors with sprawling networks any time soon.
"One might suggest that there's an opportunity at the fringe – and pretty clearly these guys are going after the millennial crowd – but scaling up dramatically will never be an easy thing to do if you're a facilities-based provider [that builds and owns your own networks]," Macquarie's Mr. MacDonald says.
Selling might be an option but Mr. Amendola insists that he and his partners – Mr. Armstrong and his father, Michael Armstrong – don't want to sell, despite fielding interest from big telecom companies and private equity players.
With just 110 employees, Beanfield is focused on steady but controlled growth, Mr. Amendola says. The company is private and won't disclose its exact customer or financial numbers, but he says it has been profitable for 15 years and has annual revenue growth of at least 20 per cent – solid, but not explosive.
"We choose to grow slower than the opportunities in front of us, as we are far more concerned with keeping the level of service people love and expect from us, than we are in making more money," he says.