Consumer Alert: A DSL Provider's Spotty History

Net connection customers tell of up-front payments, no service.

--Daniel Tynan

The stories sound remarkably similar. A late-night telemarketing call: "Congratulations, you've qualified for DSL service in your area." A sales pitch, a $304 up-front fee, payable by credit card. Months pass, and no DSL service is ever provided. Promised refunds never materialize.

It happened to Alfred Haymond of Pasadena, California, Steve Zambito of Kennesaw, Georgia, Andy Dennison of Columbus, and Terry Woods and Tim Ghrist of Dayton, Ohio. A year and a half later, they have neither DSL nor their deposits.

All five men are would-be customers of Net Connection Corporation, a small ISP in McLean, Virginia, with a history of complaints from consumers scattered throughout the country.

"I paid $303.99 for installation fees," says Zambito, who ordered service from NCC back in March 2001. "Seventeen months later, I have not received one penny. No one has ever called me, no one has ever been to my house for any kind of installation. I have been ripped off."

The Washington, D.C., arm of the Better Business Bureau lists 45 grievances regarding NCC extending over the past three years; the Virginia Department of Agriculture and Consumer Services collected 7 complaints between May 2001 and September 2002. Most of them were similar to the scenario described above.

But NCC and its president, Ray Bolouri, are no strangers to consumer dissatisfaction.

History of Gripes

According to a page on the NCC Web site, NCC was "a branch of" USS Net, aka US Surf Net, a Chicago-based ISP. (The page was removed after we interviewed Bolouri, who says NCC and USS Net have always been separate entities.)

The Better Business Bureau of Chicago and Northern Illinois says that it logged 22 complaints against USS Net from 1998 to 2000, most of which it closed as unanswered by the company. USS Net was subsequently dissolved, so the state BBB began forwarding inquiries on the company to the state attorney general's office, which received 7 complaints through 2001. Virginia's Fairfax County Consumer Protection Division received 9 complaints about NCC during the last two fiscal years, all of which were eventually favorably resolved.

But its history of consumer complaints did not prevent NCC from winning a federal contract that was worth nearly $39 million.

In December 2000, the U.S. General Services Administration awarded a $380 million DSL1 contract to ten small ISPs, including NCC. The contract was designed to let federal employees connect to the Net at high speeds without putting a strain on department budgets.

Another DSL1 contract winner, Omega Technologies, says the GSA's approval process was tough. "They put us into the blender, then strained and re-strained us," says company president Pat Williams.

GSA spokesperson Mary Alice Johnson says that the vetting process didn't include checks of Better Business Bureau filings. Rather, the agency checked NCC's Dun and Bradstreet report, made sure the firm was not on a list of companies excluded from future government contracts due to poor performance in the past, and talked to references provided by NCC.

"We asked about their timeliness--do they finish projects completely, do they respond to complaints and inquiries in a timely fashion?" she points out. "They [NCC] were a satisfactory company."

Bankrupt Provider

NCC customer Terry Woods might not agree with that benign assessment. After he languished for months waiting for a refund from NCC, the company told him that it had given his money to Capital Area Internet Services, which provided the Internet access for NCC's customers. NCC told Woods to approach CAIS for a refund. But in November 2001, the D.C.-based CAIS (by then renamed Ardent Communications) filed for Chapter 11 bankruptcy and sold off most of its assets.

"But I gave my money to Net Connection Corp., and all they did was run me around for 16 months," Woods said.

A former CAIS executive says that the firm never saw a penny of the fees NCC collected. "That money went straight to Net Connection Corp.," says Judy Cronin, a former vice president of channel sales.

CAIS, in turn, had partnered with Covad to complete its DSL orders. Covad spokesperson Martha Sessums says that the company received 334 DSL orders from USS Net and NCC, of which only 10 are still active. "The vast majority never qualified for the service in the first place," she says.

But in a phone interview, Bolouri asserted that virtually all of the potential customers NCC had identified as prequalified had in fact prequalified online by the most common criterion--being located within a specified distance from a central switching office set up for DSL service.

"Our systems were connected directly to CAIS's," says Bolouri. He says "a number" of NCC's orders were filled, but that a "large number"--Bolouri can't remember how many--just sat in the queue at CAIS for "a number" of months. Bolouri says CAIS executives assured him that the orders would move forward, but two months later CAIS filed for bankruptcy.

"To alleviate customer issues, we made an agreement with EarthLink to provide services for all these clients," says Bolouri. "Because of delays involved, we asked they be given two additional free months." As an alternative, he says, he offered customers a partial refund in accordance with their terms-of-service agreement.

But while Alfred Haymond does remember being told during one of his calls to NCC that he would be getting a letter describing an "arrangement" with EarthLink, neither he nor any of the four other customers interviewed for this story recalls receiving the offer Bolouri describes.

And EarthLink spokesperson Carla Shaw says that the company never made any special commitment to provide service for NCC customers. "There was a referral agreement where Mr. Bolouri could receive payment for customers who signed on with EarthLink through him," contends Shaw. "But it was up to the subscribers to initiate contact with us." Shaw says that only a handful of NCC customers signed up with EarthLink.

A Big Disconnect

The GSA says that the federal DSL1 contract never attracted many takers and is therefore unlikely to be renewed.

Meanwhile, chief executive Ed Johnson of the Washington, D.C., metropolitan BBB says that he urges caution to anyone approaching NCC for service. "If our past complaint experience record is any indication of the future, consumers would be well advised to consider taking their business elsewhere," Johnson says.

--Daniel Tynan