Former Agent Sues Qwest for $23 Million

Posted: 07/1999

Former Agent Sues Qwest for $23 Million
By Ken Branson

NCN Inc., Chattanooga, Tenn., a former agent of Qwest Communications International
Inc., Denver, is suing Qwest for allegedly misleading its management, failing to pay
commissions due NCN and breach of contract. NCN is asking for $23 million in compensatory
and punitive damages.

A Qwest spokesman declined to comment on NCN’s suit, other than to say that "we’ll
do our best to resolve this quickly and make sure the customers continue to receive
service, whether from NCN or Qwest."

NCN’s side of the story is set forth in a complaint the company filed Feb. 16 (but
announced only recently) in Superior Court in Hamilton County, Tenn. According to NCN’s
suit, NCN decided to sign on as a Qwest agent in the spring of 1996.

Problems began almost immediately, according to the suit. NCN Vice President Wally
Reece and his colleagues say they understood that Qwest service was available nationally
but, when they returned to Chattanooga, they discovered it was not available in six
northeastern states. Switching customers from their old long distance carrier to Qwest
took much longer than it should have, according to the suit–an average of 30 days instead
of the expected 10 to 14 days. The Qwest long distance calling card, a prime selling point
in the negotiations between Qwest and NCN, was sold to customers but often not delivered
by Qwest, according to the suit.

NCN representatives met with Qwest executives several times over the next two years to
straighten out their difficulties, but Qwest failed to deliver, according to the suit.
This cost NCN subagents, customers and credibility, Reece says.

Finally, Reece says, Qwest began direct marketing campaigns that included NCN
customers, offering them a slightly lower rate than they were being charged for Qwest
service by NCN. More meetings between the two companies failed to resolve differences,
Reece remembers, and early this year, NCN broke off its relationship with Qwest and signed
on as an agent for Network Plus Inc., Quincy, Mass.

The struggle has left NCN fighting for its survival, according to Reece. At one point
early in its relationship with Qwest, NCN had 31,000 customers and during one month
produced nearly $300,000 in revenue. Now, the company is down to 5,000 customers and is
producing about $100,000 in revenue per month.