Linking telecommunications firms around the globe

July 07, 2009— Mount Pearl, Newfoundland and Labrador

Avalon Microelectronics Inc.

In a world where information zips around the globe at the speed of light, telecommunications companies need the ability to link their optical networks together. In Mount Pearl, NL, a small Canadian microelectronics company has developed the sophisticated software that allows them to do just that.

Wally Haas, an electrical engineer, had worked in Ottawa's semi-conductor industry for 10 years when he and his wife decided to move their young family back to Newfoundland, closer to his in-laws. But there was no semi-conductor industry in St. John's – so Haas decided to create his own.

Haas knew that a generic microchip, called the FPGA, would make it possible to serve the growing need telecommunications companies have to meet international standards that regulate the way they transmit their optical signals. But the microchip wouldn't serve that market unless it contained a core piece of intellectual property that could program the chip.

That's where Avalon Microelectronics came in.

Haas formed Avalon as a sole proprietorship in 2004 to develop and market the intellectual property core he created, a 43Gbit/s Optical Transport Network framer. Essentially, the core works like software, programming the FPGA microchip. When companies buy and install the Avalon software, their optical networks conform to international standards. Once all companies conform to these standards, they can 'talk' to each other.

Ultimately, that linkage means customers of communications companies – including telephone and cable networks – get faster, more reliable Internet connections. When customers watch high-definition television or phone friends around the world using Skype, their connections are smoother and faster, with fewer delays and less background noise.

Before Avalon introduced its standardized intellectual property core, companies had to customize their own software. Telecommunications companies had to devote entire departments to ensuring they could meet the international standard, a costly drain on resources that did not provide the firms with any competitive advantage.

“It made it more difficult for everyone to interconnect and it was very expensive,” Haas explains. “The number one reason Avalon clients buy our product is that it saves them 25-50 percent in development costs.”

With the help of the National Research Council of Canada Industrial Research Assistance Program (NRC-IRAP), Haas was able to create a proof of concept. The NRC-IRAP investment allowed him to develop the intellectual property core, create a demonstration platform and then prove its worth in his potential customers' labs.

“Because we were able to leverage the intellectual property that NRC-IRAP funding allowed us to create, we sold close to $1 million of this software to customers almost immediately – within nine months,” says Haas.

By early 2006, Haas had incorporated and Avalon began producing the software. Since then, the company has grown to 20 employees, including four Newfoundland “expatriates” who have moved back to their home province.

Working with NRC-IRAP's industrial technical advisor gave Haas access to market research that predicted a larger market for his intellectual property than he had originally targeted. Going after that market has paid off. Avalon now markets to more than a dozen telecommunications giants in Canada, the United States, Europe, China, Japan and New Zealand. Despite the recession, the firm is still hiring and revenues, which initially grew by 50 percent a year, are still growing.

“If a young entrepreneur is out there looking to get into tech, they should talk to NRC-IRAP,” says Haas, who believes Avalon would not exist without the Program. “Their belief in us and their financial support allowed us to create the development system, which allowed us to sell to our customers, which gave us the business. So we're big fans of NRC-IRAP.”

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