A Local VoIP Provider

Whether ISPs see M5 as an example to imitate or a potential partner to work with, there's a lot to learn from the business focused VoIP provider with ISP roots.

by Alex Goldman ISP-Planet Managing Editor [June 3, 2005]

M5 Networks is a voice provider with an ISP pedigree. The company's CEO, Dan Hoffman, was part of the management teams at Interport and also Asia Online. One of many things he learned: doing internet telephony yourself is very painful.

"We tried using Centrex technology at Interport in 1994, and eventually spent over $80,000 on dumb technology. We were tech people and we could not get this technology to work right. At Asia Online, we spent over $2 million on phone systems from Alcatel. So we knew it was a major pain point for businesses."

So Hoffman and others co-founded local New York City player M5. The company is focused on serving businesses with 5 to 500 seats. "We don't knock on people's doors promising them savings on their long distance," Hoffman jokes.

Just like a local ISP, the prime differentiator for M5, Hoffman believes, is customer service. "We don't over promise, and we take care of our clients."

Of course, you have to take care of business clients. "When you're providing business service, it's just not acceptable to have the lines go down. We built our own network monitoring system and we're measure things we never measured as an ISP, such as jitter."

The network enables the company to care for its own. "I'm not a big believer in the disaggregation of services. You cannot yet buy a conference bridge from a company in Chicago and have your voice mail in Germany," he says.

The company is a Cisco shop, and it has its own local network. But there's far less room for problems then there is on an ISP. "You cannot oversubscribe this network in the way you can oversubscribe a data network. As a result, we're more sensitive to a spike in traffic, or to having an IP address blacklisted. The big data networks are not built to be this sensitive."

And the future won't be any easier. "New products such as P2P video conferencing will consume even more bandwidth," Hoffman predicts.

Let's fix these problems ourselves
For any IP telephony provider, 911 is a real challenge. Even with full 911, the company has to be extra careful. For example, if a New York City based company sends all calls through a PBX in New York, but the Plano, Texas office needs to call 911, the call has to go to the right place. Hoffman says SBC and Verizon are smart to offer a good solution, although that solution is new.

"I'm a private sector guy, and I'd like to solve this ourselves, without government intervention," Hoffman says.

The company's most famous customer? Jeff Pulver. "He calls himself the 'Rosa Parks of telecom'," laughs Hoffman.

As to taxation, the company's taking a conservative approach that we think is becoming quite common among VoIP providers. It's charging and paying all fees including sales tax and the USF.

The M5 future
In order to go to the next level, the company is appearing at ISPCON. It does not have a reseller agreement set up for ISPs, but works with many integrators, and expects to be able to work in the same way with ISPs. "We've been taking lots of calls from ISPs about working with us," admits Hoffman.

The plan for the future is clear. "There's a real opportunity in telecom for a professional, ethical, customer service focused company. We're going to keep getting better at solving customer problems in verticals like real estate, law, finance, and health care. We have huge customer satisfaction, and our user base is almost all through customer referrals. Our network is at over four nines reliability, and we're profitable."

—End