Vegas phone company NOS closes two offices

Kevin Ferguson

Wednesday, Aug. 15, 2001 | 11:32 a.m.

A Las Vegas-based telecommunications firm -- the center of numerous state and federal investigations over alleged deceptive marketing practices -- has closed two of its three local offices.

NOS Communications, a reseller of local and long-distance phone service, closed its East Tropicana Avenue offices in what a spokeswoman called "a move toward consolidation."

The company still operates an office at 4380 Boulder Highway.

"They have been consolidating its business over the past 1 1/2 months due to the slowdown in the economy," said Paula Yakubik, a company spokeswoman.

A year ago, the company advertised on its website that it employed more than 3,000 people, said an Aug. 8, 2000, San Francisco Chronicle article.

Yakubic was unaware of how many people NOS Communications employed Tuesday. Danny Adams, a Washington D.C.-based NOS Communications lawyer who takes media inquiries for the company, also could not give a staff headcount.

Adams did say that NOS Communications' customer base has declined by about 20 percent to 25 percent in the past few months. In April, he said the company had 120,000 customers in 48 states. Tuesday he said it was down to about 90,000 to 100,000.

Last month, Utah's Division of Public Utilities recommended to the Utah Public Service Commission that it deny NOS Communications' request for a certificate, which would allow the company to provide local phone service in the state.

Utah public utilities spokesman Scott Thompson said the recommendation for the certificate denial was based on numerous problems the company has had in other states.

Thompson said NOS officials plan to meet with Utah regulators in the next few days in order to plead their case.

NOS Communications' billing method is at the heart of troubles the company has had with the Federal Communications Commission (FCC) and state regulators from Florida, Wisconsin, California and Connecticut.

The FCC fined NOS Communications and its sister company Affinity Network a combined $1 million in April for engaging in unfair and deceptive marketing tactics.

Adams said the company has not paid the fine. Instead, NOS has denied any wrongdoing and has filed an appeal to the FCC and is waiting for a response.

FCC officials said the appeal is pending.

NOS Communications also offers local and long-distance service nationwide through businesses called Affinity Network Inc., HorizonOne, NOSVA Limited Partnership, Inetba, Zero Plus, CierraCom Systems and iVantage Network Solutions.

The company bills its customers based on a system called "total call units," instead of the traditional cents-per-minute method.

Some customers have complained that their bills have been two to three times larger than what they were promised when they signed up because it wasn't explained to them how to calculate TCUs into cents-per-minute.

This unorthodox rate system is spelled out in a thick legal document called a tariff, which most customers are not aware of.

NOS' Adams said sales clerks are not allowed to explain the method to its customers.

"There's a special team of about 15 that are trained to explain how to calculate TCUs," Adams said.

Florida utility officials were close to yanking NOS' operating license last year, but in August NOS and its sister company Quantum Link Communications agreed to file a new governing document with the state that better explained the accounting method.

To convert minutes into TCUs under this system, the company multiplies the number of minutes by two, Adams said.

Minutes that exceed 20 are based on one minute per one TCU.

"My bureau chief, who is an auditor, likens it to a taxi meter. You have a set charge at the start, the longer you go, the less it is," said Jeff Bates, a research assistant for the Florida Public Service Commission.

He said the state's tariff rules don't require companies to bill on a per-minute billing method.

Some lawyers representing clients against NOS Communications say utility officials are soft on the company.

"It's unfortunate that some (utilities officials) see their role as dealing with complaints rather than fixing the problem," said Daniel Girard, a San Francisco-based lawyer whose client is suing NOS Communications for alleged overbilling.

Bates said as long as a company complies with the state's rules, there's not much utility officials can do.

"We're in a tough position," Bates said. "We have to look at it from both perspectives, the company's and the customers."