Jeremy McNamara

Welcome to the first installment of my series entitled “How Not To Do Business.” This is an editorial look into exactly how I discovered Asterisk, started NuFone and then was forced to walk away from everything.

I discovered Asterisk shortly after Mark Spencer released it back in 1999. My first thoughts were “This might be something fun and exciting to play with.” I never thought I would ever do anything real with Asterisk – Boy was I wrong…

In Early 2002, I was working for an H.323 based VoIP provider in Traverse City, MI. They were having difficulties providing a common platform across all of their customers. Some customers used Cisco gear, others used Clarent (which was not based on H.323) and they even tried to “roll their own” solution using Dialogic cards for at least one customer.

Remembering Asterisk, I presented it to my employer as a possible solution, however almost immediately their response was “What business will ever rely on an open-source PBX?”

I ended up dropping the subject and went on to be a happy worker bee for a little while longer. However, it was at this point that I started participating in Asterisk mailing list discussions, hanging out in the Asterisk IRC channel and learning everything I could about Asterisk, because I truly believed in its power.

I immediately noticed a very hungry, captive audience wanting a VoIP Provider that supported IAX. There were no commercially available IAX Providers at that time. In fact, IAXTel was going strong around that same time as well.

One night, I remember hanging out in #Asterisk IRC channel. Someone I had not seen around before joined the channel and started complaining that he needed a new phone company. I started thinking “new phone”, “Nu Phone” and then finally since I am a geek I thought about “NuFone.” I noticed NuFone.net was available, so I registered it on a whim and then promptly forgot about it.

Shortly after asterisk-oh323 was released, I brought the topic of deploying an Asterisk based solution again, but was denied again since the H.323 support in Asterisk was less than acceptable for my employer’s usage.

I attempted to work with the author of asterisk-oh323, but not one of my suggestions was taken seriously. I presume after noticing the lack of cooperation, Mark contacted me via private message on IRC. He encouraged me to somehow fix H.323, as we both agreed supporting H.323 was important for Asterisk, but he had no interest in learning yet another complex protocol.

He gave me his cell phone number and told me to call him any time if I ran into any problems.

Instead of fixing the existing driver, I decided it was best I start my own H.323 channel driver. Mainly since the author(s) of asterisk-oh323 were not willing to sign the standard disclaimer that Linux Support Services (now Digium) required for code to be distributed with Asterisk.

I called Mark’s cell phone just before 5pm on a Friday asking if I could contact him over the weekend. He immediately said, “Absolutely!” He then told me to follow chan_sip as much as possible, since he had just updated Asterisk’s RTP stack with specific API functions that he believed chan_h323 could utilize.

Since I did not want any potential conflicts to arise with my employer, I spent that entire weekend, at my house, on my own computers and my own H.323 enabled Cisco Phones creating chan_h323.

I ended up calling Mark a few times, mostly about C concepts (like type casting) that I had not fully grasped and how specific Asterisk API functions worked. I also followed asterisk-oh323’s method of implementing a C++ library into a C application – which was the one part of the code both Mark and I agreed to be “the right way.”

Early that Sunday evening, I was able make and receive the first telephone call with bi-directional audio using chan_h323 with Asterisk’s native RTP stack.

I immediately called Mark. He dropped what he was doing and set me up with CVS access to commit my code. However, I told Mark, perhaps we should let a few others examine the code before committing it.

Having previously registered NuFone.net, I decided to setup a SourceForge account and had them host asterisk.nufone.net.

After about a month of soliciting assistance from others in the Asterisk community, I told Mark I felt the code was ready to commit to CVS. I cannot find my announcement in the Digium mailing list archives, but I believe this happened sometime in December 2002 or January 2003.

I then went back to my employer with the news that I had ‘fixed’ the H.323 situation in Asterisk. They finally agreed to dedicate a few resources to ‘testing’ Asterisk. However, after about a month of, in my opinion, very successful testing it was decided they could not deal with the fact Asterisk was ‘open source’ and told me to not mention Asterisk again.

The difficulty was that the technical guys (including myself) were sold on Asterisk and most of the others had me set them up with their own personal Asterisk solutions – outside of work.

Since I could not encourage my employer to allow me to deploy Asterisk, I decided to present them with a business proposal.

The deal was, they were going to supply me with Co-location space, power, PRIs and telephone numbers. In exchange, I was going to provide them with Asterisk technical support and the labor for creating any custom configurations/applications when they ‘resold’ Asterisk. (The word ‘resold’ here is very important – more on that later.)

It was at this point I walked away from my salary and benefits to attempt my first business.

The moment the deal was inked, I immediately logged into the Asterisk IRC channel and asked if anyone wanted to send me some IAX based VoIP calls. Quite a few people immediately responded. I began making entries into my iax.conf and private messaged each one of them back the access information they needed to send me telephone calls.

After a couple days, I had many people asking me how they could pay me for IAX VoIP service and if I could provide them with telephone numbers as well. So, I went out and created a PayPal account specifically for NuFone and inquired with my business partner (ex-employer) about the process of ordering telephone numbers.

Now is the time for me to point out that I had no business plan, zero employees, a single non-redundant off-the-shelf PC running at a random office in Traverse City, MI with 4 PRIs (only 2 of which I was officially ‘authorized’ to use at any one time) using a borrowed 4 port Zaptel PRI card.

This was my very first mistake in business.

I should have taken at least a couple weeks to organize myself and start writing a business plan, including formulating an exit strategy…I did no such thing. I saw the captive audience that was throwing money at me for my services. I did not even have a clue what I was going to call this new business, because I really did not like the name “NuFone” however since I was already signing up customers and now taking their money, I didn’t bother to make a change.

Word started spreading like wildfire. I would get calls, emails, instant messages and private messages on IRC from people wanting IAX VoIP service. Archive.org shows how lame the NuFone website was on February 20th 2003.

At this point, I talked with a ‘friend of a friend ‘ who was allegedly a ‘business person’ and he recommended we create an LLC and acquire ‘Errors and Omissions’ insurance.

However, I did not know this at the time, but he ended up being offered some other opportunity and never ended up following through with anything, including creating the LLC entity, despite telling me otherwise and that he would ‘get back with me.’

Unbeknownst of our ‘business’ problems, at this point, I thought ‘business’ was great. I was signing up dozens, then even sometimes hundreds of new accounts, all manually, each and every day.

Going by the deal that I was provided by my business partner (ex-employer) NuFone was making over a penny per minute profit. The ‘pre-paid’ concept of our so-called business was working, or so I thought.

I ended up bringing in a college friend, Greg, to help me sign up accounts and to give me time to work on other tasks, like creating a website and members portal so we could automate most aspects of the operation and help calm people down about NuFone being a ‘fly by night’ operation.

Once we are finally able to launch the members portal and our automated sign-up site, our service exploded. Within days of our site going live, we maxed out all 4 of our PRIs and had to get 4 more PRIs, just for our outbound calling services.

One of the services that caught on big time was US48 Toll-Free numbers. Based on the costs I received from my business partner (ex-employer) we were able to price our services quite a bit cheaper than any traditional Toll-Free service and back then not many other VoIP providers were providing toll-free services (or they were not Asterisk ‘friendly.’)

Since we now had a website that our customers regularly visited, we were able to very successfully up-sell US48 toll-free and Michigan telephone number services, for a considerable profit per minute – again based on the deal I thought NuFone was getting.

After quite a while, perhaps over a year, my business partner (ex-employer) discovered that NuFone had became one of their largest customers, yet they were not making much (any?) money on us, since they had given us such a sweetheart deal. I presume they assumed I would fail and end up back as an employee, but really I do not know why I was given such a good deal.

Out of the blue one day I received an email from one of the newer account controller ladies working for my business partner (ex-employer) stating that I had missed a bill and it was due immediately or our services would be suspended. This bill was for $125,000 in setup fees on every US48 toll-free number we had setup since we had started providing toll-free numbers – at least 6 months worth of business, but perhaps longer.

I call up the ladies I was used to working with (my ex-coworkers) and was immediately deferred to this new girl. She stated she sent me an invoice 30 days ago and I did not respond. I immediately disputed these charges, in writing, via certified letter.

I received a response, via a telephone call, quite a few days later stating that since I had not responded in 30 days, I could not dispute the charges. However, I had an account statement from 14 days prior which DID NOT include any such $125,000 invoice, so I claimed that this invoice could not have been sent to me 30 days ago and I had the legitimate right to dispute it.

I submitted my all of my dispute documentation, in writing, via certified letters once again and did not hear anything back. I continued to make weekly payments on our bill, as agreed.

A few months later, one Friday evening I get an urgent call from Greg saying that he thinks we went down.

Sure enough, a traceroute showed packets making it all they way to the edge router in the Traverse City, MI office, but no farther.

I call up Rich, my ex-coworker and the go-to technology guy for my business partner (ex-employer.)

He stated to me that he was ordered to take down my services at 5pm unless he heard differently from ‘the boss’ and only ‘the boss.’

By this time, of course, nobody could get in contact with ‘the boss,’ and Rich didn’t feel comfortable restoring my services, despite the account ladies telling him NuFone’s account was in good standing of course, minus the disputed invoice.

All weekend both Rich and myself tried to contact ‘the boss’ with no luck. First thing Monday morning, I called ‘the boss’ directly. He stated that since nobody acknowledged his demand for payment, he suspended services. Needless to say, I was beyond pissed and all sorts of speculation had fired up on the various VoIP Forums. I faxed a copy of the return receipt cards from my multiple certified letters showing that they signed for my letters, along with new copies of each letter I had previously set as part of my dispute a few months earlier.

Finally, just before the end of the business day on that Monday, ‘the boss’ had one of his other employees, one that I had not dealt with until this point, inform me that a demand was made for payment arrangements and the deadline had past, thus NuFone’s services were suspended. I demanded to know exactly how and when this demand was made.

It was not until the next day that I was informed that ‘the boss’ himself emailed my old, personal domain name, not NuFone.net, with the demand. No phone call, No certified letter nor a fax. Just an email to a domain name that was neither operational nor owned by NuFone.

Luckily, even before this dispute started, I realized that NuFone was growing faster than its ‘underlying company was willing to grow, so I started looking for alternative providers. I even did not hide this fact from ‘the boss.’ He specifically introduced me to the owner of the Michigan competitive telecom company they were buying their services from.

Unlike my ex-employer, this CLEC, near Detroit, MI was all about deploying Asterisk and I believe was an investor or at least an adviser to ‘Linux Support Services,’ now called Digium.

In the next article in this series, I will document how we quickly migrated our services to the CLEC, the others I brought in and the actions that were taken in an attempt to avoid another contract dispute and another extended outage – or so we thought…

Until next time.

Filed under: Commentary
Tags: h 323, mark spencer, new phone company, nufone, traverse city