Lost networks

America's Network, Sept 1, 2004 by Grahame Lynch

We thought we'd seen it all in telecom scams until New Jersey's Norvergence came along. This integrated service provider offered small businesses a discount bundle of voice, Internet and broadband on the condition that they leased an Adtran-sourced Matrix IP device, at a value equivalent to 80% of their normal telecom bills in return for the service. Norvergence then raised new financing using the leases as collateral.

Disaster struck when Qwest and other creditors wound the company up, eventually pushing it into Chapter 7. The result: thousands of customers left with useless Matrix boxes, enabled with software to connect with a network that no longer exists. In many cases, the boxes weren't even required to enable the service, and Adtran sells them for as low as between $600 and $2,300 retail! Some customers' gear cost them as much as $25,000 to $45,000.