This week I have witnessed the most horrific example of customer interaction that I can recall in recent history. The proud recipient of the worst company interaction of the year award is Fonality, based out of Los Angeles, California.

Approximately 1 year ago we purchased an amazing new IP phone system for our office. It had all the bells and whistles of a enterprise phone system, yet at a small business price. We worked with a responsive service-oriented local company called Veracity to get the connectivity access. They referred us to a local representative of Fonality to actually purchase the hardware and server.

We installed, got it up and running, and all of a sudden our small office had the telephone appearance of a large company.

Last week I began getting very strange emails directly from Fonality (see an attached at the conclusion of this blog). I was taken aback that they were publicly disparaging a man whose name I did not even recognize. Fonality stated that he was financially insolvent and they were offering a migration path for his customers at a reduced rate. I didn’t think it would affect me because I owned my server and had paid for all hardware and software in full, outright.

As the emails continued, I began to take more notice. The tone shifted, and Fonality informed me that on May 10th the control panel of web access on the server would be shut down unless we signed up for their nifty (expensive) service plan. Without the management interface, the system is worth no more than $19.95 telephones found at Kmart.

At this point I became concerned, and began to establish contact with someone at Fonality. After several very sterile email exchanges I finally received a telephone call from Fonality’s Manager of Customer Service, Mr. Michael E. Smith. Minutes into the call it appeared that Mr. Smith had engaged in an intensive course with their attorneys which provided him with skills necessary to legally posture. He advised me that all of my problems resided with their previous vendor in our state, and that they suggest that I pursue him, not them. I was told that it was tough luck, they knew I had paid for the service already, but if I did not pay for it again, they would disable the management system. They acted as if we were old friends, and as if they were offering me a wonderful solution. I pointed out that shutting down the management system would completely cripple the phone system. Mr. Smith was quick to point out the phones would still ring and function, and that Fonality had no intention of hurting my business. I then asked how I would be able to turn the voice message system on at night, or how I would add a phone or change an extension. His response was “That would be a problem,wouldn’t it?” As I asked him my options, he replied:
1. Upgrade your service and pay us the fee
2. Live with it the way it is
3. You can sue us if you like, I don’t care

I was so blown away and actually became very terse with Mr. Smith. I thought I was living a really bad dream. Waking up this morning I realized it was not a bad dream, just very very bad business.

What am I going to do? My immediate reaction was to go chase the snake down and kill it. Not because of the money, but because of the principle. All my business sense tells me that you just can’t treat customers this way. After a good night sleep and dreams of cutting the head off the snake, I worked it out of my system.

The reality is in such a competitive market and world, companies that behave in this manner will self destruct, they don’t need active outside participation in burning their bridge. To that end I am going to purge with this blog entry, throw a few links up to make sure it gets visible on the search term Fonality, ask those who are having similar experiences with this fine example of a pathetic company to link to this blog, and let it go.

Good riddance Fonality, you just lost the faith of 1 customer, I am sure many more to follow!


Dear Rich:

As you are likely aware, Converged Networks, the Fonality Reseller from which you purchased your PBXtra phone system, has been experiencing significant financial difficulties.

We feel that it is important for you as their customer to know that after extensive negotiation with their principal, David Burr, and after repeated extension of payment terms by Fonality, we remain unpaid for your system. This includes hardware, software, user licenses, technical support, and software maintenance costs.

Obviously, we understand how critical your phone system is to the ongoing success and daily operations of your business. Contrary to what you may have heard, your PBXtra phone system is not being shut down, and will continue to work. While we want you to continue to enjoy the full benefits that your PBXtra affords, we hope that as a fellow small business you can appreciate that we are unable to indefinitely host and support accounts for which we remain unpaid.

To that end, we would like to establish you as a direct Fonality Customer. To facilitate this, we are extending a discounted Account Transfer fee of $750 (our standard Transfer fee is $1,499). You will then be enrolled in our Annual Software Maintenance and Support Plan ($48-$65/phone, depending upon number of phones).

Example: if you own a 20 phone PBXtra system, then the total cost to transfer would be $750 + $1,160 (20 x $58) = $1,910.

Coverage details of the Fonality Annual Software Maintenance and Support program can be found here:

Specific Contract Terms & Conditions can be found here:

This reduced transfer fee offer will remain available until 5:00PM PST on Thursday, May 10, 2007. Should you choose not to accept this offer, then please note that while your system will still provide basic functions (make/receive calls), we will be unable to continue to provide access to the following services which were contracted by Mr. Burr:

access to the web-based admin and user control panel
hosted remote monitoring, management, and reporting tools
proactive PBXtra management including technical support, software maintenance, and upgrade activities

During the transfer we will audit your PBXtra to ensure that it is in a standard, supportable configuration. In the event that customizations have been made, we may not be able to support those modifications and we will discuss alternatives with you. We will then convert your customer status to a direct account, complete your enrollment in our Fonality Annual Software Maintenance and Support Program, and change your PBXtra administrative password and access control directly into your name.

We appreciate your use and commitment to Fonality products and services, and I trust that we can win your continued business as a new direct customer. I apologize for any difficulty or uncertainty that this present situation may have caused. My Customer Service Manager, Michael Smith (, will be contacting you in the next few days to discuss this proposal, and to answer any questions that you may have regarding the uninterrupted use of your Fonality PBXtra system. If you would prefer, please feel free to contact Michael directly at (310) 861-4300 x7071.

Best Regards,


Bruce M. Runyan

Vice President

Operations and Customer Care