TELECOM Digest     Wed, 22 Jun 2005 17:35:00 EDT    Volume 24 : Issue 285

Inside This Issue:                           Editor: Patrick A. Townson

    Norvergence in the News, Again (Michael Quinn)
    Telstra Ends Internet TV Deal With Microsoft (Telecom dailyLead USTA)
    40 U.S. Senators Offer BiPartisan ID Theft Bill (Lisa Minter)
    Re: Send Text Message to a Russian Cell Phone (John Cummings)
    Re: Bell Divestiture (Lisa Hancock)

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----------------------------------------------------------------------

Subject: Norvergence in the News, Again
Date: Wed, 22 Jun 2005 13:03:30 -0400
From: Michael Quinn <quinnm@bah.com>


A somewhat  long article, but I believe of interest to Telecom Digest
participants, given prior posts on the subject.

Promised Savings, They Rented the Boxes And Now They're Really Paying
for It; NorVergence Went Bankrupt; Customers Still Owe

By Dina ElBoghdady
Washington Post Staff Writer

The smooth-talking salesman with his glossy brochure promised Kelly
Vogan huge savings on his firm's telephone, cell phone and Internet
bills if only he'd rent a "revolutionary" piece of high-tech gadgetry
called the Matrix box.

With the lure of 30 to 60 percent savings, Vogan signed up with New
Jersey-based NorVergence Inc. and even insured the small red box as
required. He paid $435 a month to rent the box and an additional $13
for services, including unlimited long distance.

Last summer NorVergence filed for bankruptcy, and customers like
Vogan, who owns a home remodeling firm in Silver Spring, found that
their troubles went far beyond the loss of phone service. They
discovered they were obligated to keep paying rent on the boxes to
third parties, which had bought the rental contracts from NorVergence.

"The more I think about it, I'm not sure I even understand how it all
worked," Vogan said. "But it worked just fine for a while."

Vogan's company and 11,000 other small businesses nationwide are
entangled in an alleged scam that has attracted attention from the
Federal Trade Commission and attorneys general in about two dozen
states.

In the Washington area, at least $6.6 million in rental fees owed by
350 businesses in the District and Maryland is at stake. Numbers for
affected Virginia firms are not available.

The fallout from NorVergence's collapse illustrates how vulnerable
small-business owners are to those who prey on their lack of
technology know-how, said Jonathan Zuck, president of the Association
for Competitive Technology, which represents small
information-technology businesses.

"Small-business owners are particularly susceptible to fraud ...
because they lack in-house expertise" and sometimes end up overpaying
for services, Zuck said.

The FTC, for example, charges that the box NorVergence persuaded its
customers to rent was nothing more than a mix of standard routers that
help connect telephone equipment to long-distance providers' lines.

NorVergence and its former chief executive, Peter J. Salzano, deny any
wrongdoing. NorVergence filed for Chapter 11 protection in June 2004.
The filing was later converted to Chapter 7 liquidation.

The FTC accuses NorVergence of defrauding customers by charging
inflated rents for the boxes -- $400 to $5,700 a month -- and then
selling the rental contracts at a discount to third-party finance
companies for quick cash.

"NorVergence was able to provide a few early customers with
'discounted' services only because it used the proceeds of contracts
from new customers," the FTC said in November when it filed a civil
action against the company in U.S. District Court in New Jersey.

Here is how it worked: NorVergence bought services, such as e-mail and
Internet connections, from well-known firms such as Qwest
Communications International Inc. or Sprint Corp. at wholesale rates.

It would then re-brand, re-price and resell the services under its own
brand name, while making money off the box rentals. In the brochure
presented to Vogan, NorVergence promoted its partnership with Qwest
and Nortel Networks Corp. Both those firms distance themselves from
NorVergence.

"We did not lend our name. That was used without our permission," said
Claire Mylott, a spokeswoman for Qwest. "The reason we don't lend our
name [to any vendor] is because we can't control how our name would be
used."

Bryan Zidar, a spokesman for T-Mobile USA Inc., which provided
handsets to NorVergence, said his firm was as much a victim of
NorVergence's situation as the many small-business customers.

"When NorVergence filed for bankruptcy, we were owed significant
money," Zidar said. "So we asked the judge for the monies owed. We
didn't get it. But we were granted the opportunity to reach out to
wireless customers with T-Mobile handsets and switch them over to
T-Mobile service."

Vogan said he got a similar offer from Sprint and switched over as
soon as he learned of NorVergence's bankruptcy. Had his troubles ended
there, Vogan would have brushed off the episode as a minor
inconvenience.

Instead, the finance company in charge of his rental contract
continued to bill him $435 a month for his Matrix box. That is because
the fine print on NorVergence's rental agreements locked customers
into long-term contracts even if NorVergence failed to deliver
service.

In Vogan's case, that meant he was responsible for an additional
$19,000 to cover the balance of his five-year contract. Reluctantly,
he paid the monthly fee to protect his company's credit. Others who
refused to do so found themselves engaged in legal battles when the
finance companies sued them.

"It was frustrating," Vogan said. "I had about 3 1/2 years worth of
payments left on my contract and I had nothing to show for it but a
useless red box."

But relief is in sight.

Last month, a few of the 40 finance firms that handled NorVergence's
rental agreements agreed to forgive most of the debt owed under a
settlement reached with attorneys general in 18 states.

In Maryland and the District, settlements were reached with CIT
Technology Financing Services Inc. and CIT Group/Equipment Financing
Inc., General Electric Capital Corp., U.S. Bancorp Business Equipment
Finance Group Inc., and Wells Fargo Financial Leasing Inc.

Each firm agreed to forgive about 85 percent of the rental fees. If a
small business has paid more than the 14 or 15 percent due after July
2004, it will receive a refund of the amount it paid over that
percentage.

The deal wipes out $5.7 million in debt for 278 businesses in Maryland
and $924,000 in debt for 39 businesses in the District.

"We believe we have done the best we can do," said Maryland Attorney
General J. Joseph Curran Jr. "We were not able to convince the finance
firms to take the entire loss. They came back and said: 'We are
victims too. Why should we suffer the entire loss?' "

Vogan plans to take part in the settlement. Other small-business
owners are not so sure.

Jean Hurley of Ellicott City said she and her husband have not yet
decided whether to settle because it would mean backing out of a
class-action lawsuit against NorVergence.

"The settlement just hit my desk," Hurley said last week. Hurley said
her husband's real estate firm, Hobelmann Corp., rented the Matrix box
for $269 a month. "I asked my attorney to look at [the settlement] and
he said it sounded like a good idea."

So far, no one is taking responsibility for the NorVergence debacle.

Salzano, the company's former chief executive, has filed for personal
bankruptcy. Through his attorney, he said his firm was a victim of its
own success. It could not hook up the Matrix boxes fast enough given
its backlog of customers, said Michael D. Sirota, Salzano's attorney.

The leasing companies got spooked by the delay in hookups and refused
to buy rental contracts until the hookups were completed, Sirota said.

"The leasing companies changed the rules of the game on NorVergence,"
Sirota said. "That created a cash crunch for NorVergence and that was
the downfall" of the company because it was financed by selling the
leases to the leasing companies.

As for Vogan and Hurley, they both have their Matrix boxes in their
respective offices, a token of caution when salesmen come calling.

(c) 2005 The Washington Post Company

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------------------------------

Date: Wed, 22 Jun 2005 13:48:23 EDT
From: Telecom dailyLead from USTA <usta@dailylead.com>
Subject: Telstra Ends Internet TV Deal With Microsoft


Telecom dailyLead from USTA
June 22, 2005
http://www.dailylead.com/latestIssue.jsp?i=22535&l=2017006

		TODAY'S HEADLINES
	
NEWS OF THE DAY
* Telstra ends Internet TV deal with Microsoft
BUSINESS & INDUSTRY WATCH
* Orlando shuts down public Wi-Fi network
* Motorola to offer Wi-Fi/cellular handset in Japan
* Microsoft seeks supremacy in smart phone market
* Report: VoIP, wireless on the rise in W. Europe
USTA SPOTLIGHT 
* New Offices, New Logo -- US Telecom Reflects the Dynamic Telecom Industry
* Marketing Strategies Webinar Tomorrow: How to Get the Most from Your
Resources
EMERGING TECHNOLOGIES
* AT&T aims to spearhead FMC
REGULATORY & LEGISLATIVE
* Cities worry VoIP will erode tax revenue

Follow the link below to read quick summaries of these stories and others.
http://www.dailylead.com/latestIssue.jsp?i=22535&l=2017006

------------------------------

From: Lisa Minter <lisa_minter2001@yahoo.com>
Subject: 40 U.S. Senators Offer BiPartisan Data Breach Bill
Date: Wed, 22 Jun 2005 15:25:13 -0500


Business leaders who fail to tell consumers when they may be at risk
of identity theft could face jail under a bipartisan bill expected to
be introduced in the U.S. Senate on Wednesday.

Senate Judiciary Committee Chairman Arlen Specter and Sen. Patrick
Leahy, the committee's top Democrat, would also restrict a
freewheeling trade in Social Security numbers that are prized by
identity thieves.

The bill, the first to draw Republican sponsorship, comes on the heels
of the largest security breach announced to date after an outsider
gained access to 40 million credit-card accounts held by CardSystems
Solutions Inc., a payment processor.

Dozens of similar breaches have been disclosed this year after a
California state law required businesses to make such incidents
public.

Businesses and consumers have urged the Republican-controlled Congress
to pass a national version of the California notification law.

Specter and Leahy's bill would require businesses across the nation to
make data-security breaches public. Those that do not could face
criminal prosecution.

According to a summary obtained by Reuters, their bill also would
sharply limit the trade in Social Security numbers that can be used in
identity theft.

Businesses would not be able to require consumers to reveal their
Social Security numbers in return for goods or services, and they
would be forbidden to buy or sell Social Security numbers without
consumer permission.

Consumers would also be able to access the profiles maintained by
"data brokers" like ChoicePoint Inc. and fix any errors, as they are
currently able to do with credit reports.

Businesses would have to protect consumer accounts from unauthorized
access, and criminal penalties for such activity would be increased.

At least three Senate Democrats have introduced data-security bills,
but business groups have been quietly lobbying against them out of
concerns the regulations would be too strict.

Republicans in the House of Representatives are preparing efforts of
their own. Texas Republican Rep. Joe Barton (news, bio, voting
record), who chairs the House Energy and Commerce Committee, is
working on a bill that would also limit the trade in Social Security
numbers. Florida Republican Rep.  Cliff Stearns (news, bio, voting
record), who chairs a consumer-protection subcommittee, is drafting a
bill that would include incentives for businesses to improve their
security.

Copyright 2005 Reuters Limited.

NOTE: For more telecom/internet/networking/computer news from the
daily media, check out our feature 'Telecom Digest Extra' each day at
http://telecom-digest.org/td-extra/more-news.html . Hundreds of new
articles daily.

------------------------------

From: John Cummings <n4bkn.no@spam.bellsouth.net>
Subject: Re: Send Text Message to a Russian Cell Phone
Organization: BellSouth Internet Group
Date: Wed, 22 Jun 2005 12:39:14 -0600


cronept wrote:

> Hi,

> I have a friend who is in Russia. I am in the states. She is using a
> GSM cell phone. I am wondering if I can send text message to her from
> the Internet? I tried AIM but I do not know how to send to a cellphone
> outside the US. Does anybody know any websites or any software can do
> that? Thanks alot. I appciate it.

> Jim

At the GSMworld site, you'll find this page listing all of the Russian
cellphone operators.
http://www.gsmworld.com/roaming/gsminfo/cou_ru.shtml Once you know
whose service she's buying, you can hunt through her operator's
website. Do you read Russian, or some Cyrillic characters? Better
still, ask her to do the search.

John C.

------------------------------

From: hancock4@bbs.cpcn.com
Subject: Re: Bell Divestiture
Date: 22 Jun 2005 13:08:43 -0700


>> What was the cost of the touch-tone oscillator for a telephone set,
>> vs.  the cost of a rotary dial?

> Considering that a rotary dial was nothing but springs and gears,
> while a DTMF pad had coils (Bell loved those ferrous cup cores!),
> resistors, transistors, specially plated contacts, etc.

It is hard for us to believe today, but it took a very long time for
the price of electronics to come down far enough to be cheaper than
equivalent mechanical devices.

In 1965 some consumer electronic things like radios, tape recorders,
and TV sets still used some vacuum tubes because they were still
cheapter than transistors at that point in time.

So, stamping out and assembling springs and gears was cheaper than
making and assembling transistors for a Touch Tone pad in those years.
All components were discrete in those days.

As mentioned, in another thread it was stated that it was cheaper to
do many pre-processing steps on electro-mechanical gear than in the
electronic CPU because the CPU was so damn expensive compared to the
EAM gear.  Most computer centers of that era had EAM gear on standby
to do supplemental tasks like card sorting or card deck printing
rather than have the expensive computer do it.  Further, it was even
cheaper despite the cost of paying a person to run the EAM machine
instead of the automatic computer.

While others claim Touch Tone saved the phone company money, I still
assert it was more expensive for them, esp in non-common- control
offices.  I don't think tone interpreters for common- control offices
were that cheap either.

I note that PBX operators had 20 pps dials while the rest of us had 10
pps.  Some kids experimented and found 20 pps worked at home.  Now, it
was easy to modify the dial to go faster -- so why didn't Bell have
everyone at 20 pps -- faster utilization of equipment?  I strongly
suspect there were valid technical reasons not to.

Indeed, from what I recall from Bell Labs Record, it took quite some
time (well into the 1970s) that Bell equipment could really make good
use of fast dialing.  Eventually they would start interpreting digits
as they came in and begin route set up before the whole number was
dialed.


[TELECOM Digest Editor's Note: I had a couple of Hayes Modems which
could be switched between pulse and tone dialing, and you could set
the 'speed' of the pulsing or the 'speed' of the tone signals. You 
could make both modes go quite fast; with tone dialing so fast that
it was little more than just a single blip in your ear, and most
times it would work quite well. Only on occassion the modem would
give its short little blip or tone burst when dialing *before* the
line was set up to allow it, and you would have to redial, but
usually it worked okay.  PAT] 

------------------------------


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End of TELECOM Digest V24 #285
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