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Speaking With Empire One Telecom's Paul Butler


Greg Galitzine, editorial director of Internet Telephony, interviewed Paul Butler, COO of Empire One Telecom (news - alerts). The results of their dialogue appear below.

GG: Who is Empire One Telecom?

PB: Empire One Telecom (EOT) is a small, ethnic-niched facility-based CLEC/IXC/Broadband Provider based in Brooklyn, NY, and covers about 22 states. The company was established in 1996 and survived the telecom bubble and is successfully launching a comeback from the dark days of telecom on its own. This little but profitable carrier is using all its resources to create competitive products and grow its existing business as well as generating new business. EOT offers local, long-distance, broadband, dial-up, voice-over-broadband, prepaid, and wholesale.

While most UNE-P CLECs were taking the "wait-and-see" approach to the ruling on unbundled switching, EOT was already deploying its facility model and mapping out its game plan. Empire never saw the value in UNE-P since most of its customers were residential and used dial-up service had no interested in unlimited packages, and actually found UNE-P not a cost effective solution for an overwhelming majority of its customers. EOT saw no light at the end of the tunnel for UNE-P and realized the facility advantages to owning a network and went to work on a better model. EOT has grown 30 percent in the last six months, and by Wall Street standards, is pretty profitable. EOT is reinvesting its earnings back into the network, marketing, and new products that will make it a more formidable and profitable carrier in the near future as the company expands its facility foot print and product set.

GG: You have been quoted as saying, "It is no longer enough to think outside the box, you need to tear it apart!" What do you mean by that?

PB: Well, to think out of the box is saying, 'let's try something different.' To me, tearing up the box is tearing up the model, stepping back, and looking at the shredded box and building it all over again and better.

You have to take what you've learned and what you have, then, think of what it is you want to do and put that box back together again. It better not take long or cost a lot and you need to fill it up quickly, "Build a better model based on knowledge and experience." I don't believe that every telecom executive out there is as creative as me because they lack the experience in all aspects of the business and fall short of the real understanding of the business.

Since EOT was originally founded in 1996, I have worked every aspect of the business and understand it all from customer service, regulatory, network engineering, marketing, and more. If you can't see what all the pieces of the box mean after you tear it up how do you put back the pieces and build a better box? When you build that new box it has to make you money right away or you end up back in the same hole CLECs were in with the "build it and they will come" ideology. What CLECs lack in financial muscle can be made up with marketing savvy, and that's a big piece of the box.

GG: Several years ago, it was thought that CLECs were heading the way of the dinosaurs. Describe the turnaround of the CLEC market. To what do you attribute your ability to pull through the "lean years" and survive the telecom meltdown?

PB: To be honest, we had a great model but bankers never understood the business and looked for the quick buck with big fees. So money went to the big names, not those who exhibited fundamentals, and so we saw the Dinosaurs. The Big Dinosaurs needed a lot to survive and there just wasn't enough for all. But, just like in the Dinosaur days the smaller survived, as did we. What has enabled EOT to survive is the ability to move quickly, lower costs, retool on the cheap, and spend marketing dollars where we got the best return, acquisition costs under $20.

EOT has taken advantage of everything we could find. Better digs, tax breaks, lower equipment costs, and most of all product development and marketing, and execution. We didn't blow $5 Billion like a few companies out there, we made sure if we spent $50,000 it came right back three-fold! We didn't have the private jets or leased BMWs or blown-out networks to weigh us down. We ran lean and looked ahead, just like we are right now. We know what's coming and we are building, getting ready to fight and win more business than ever before.

GG: Has VoIP played any role in your success?

PB: Yes, we quickly deployed VoIP with Coppercom and it was a significant part of our growth in the last six months and continues to grow every month, and will be a significant piece of our product set in the future. You won't survive without it.

GG: What role do session border controllers play in the Empire One network?

PB: They hide your network and are the first line of defense; they help find paths to customers behind firewalls and manage NAT-ing and provide some level of port management. We work with Ditech and it's nice to talk with them about ideas and hear, "yeah that would be great;" suddenly, you're on the phone with product development and the next thing you know you have what you asked for. A vendor who can see value in what you ask for and how and what it means to other customers of future customers is invaluable.

The SBC plays a small role today but a smart one will add applications and value for its customers, and they are from what I am hearing, and that's good. I see SBC becoming more valuable to IP networks and service providers.

GG: Do you have any further thoughts you'd like to add for any CLECs reading this article?

PB: You either understand this business or you better have big bucks behind you. Lee Iacocca put it very well when he said, "Lead, follow or get out of the way." If you think spending 187 million to get 170 million is revenue (Vonage) is great, think again. You could have saved 17 million and given it away.

Think of the CLECs who built networks, because it was how Wall Street valued them one day, and the next day said networks have no value, where is the revenue? Don't get caught up in the "build and burn," you never know where your next meal is coming from. Build and Market smart, learn about what you have and how to apply what you have to make money, and you won't have to find a banker they'll find you! Stick to business fundamentals of making money. You don't have to be everything tomorrow, you have time if you do it right. IT

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