Mountain State Spotlight investigates: When ClearFiber came to town

Mountain State Spotlight
June 21, 2023

Editor’s note: This story was originally published by Mountain State Spotlight. Get stories like this delivered to your email inbox once a week; sign up for the free newsletter at https://mountainstatespotlight.org/newsletter

By Ellie Heffernan, Mountain State Spotlight

Like many West Virginians, Morgantown resident Tiphani Davis has been frustrated with the slow internet speeds offered by big companies. So she was excited when she heard about a local startup called ClearFiber, which offered fast internet at more affordable prices. She signed up and, for years, was completely satisfied. But in February 2022, Davis started to notice occasional overcharges — where she was double-billed for a month’s worth of internet.

“And at first I didn’t think much about it,” she said.

But then it happened again and again, until ClearFiber had hit Davis with nearly $400 of unauthorized charges. And despite repeated calls and emails to the company, she had no luck figuring out why.

“I would call over and over again, and every time I clicked the button to talk to billing, I would get hung up on,” she said.

Davis eventually got ClearFiber to credit her account for months of free internet, but she didn’t get back the money she’d been counting on to pay other expenses. It was like she’d been unexpectedly forced to pay her internet bill months in advance.

And she’s not the only ClearFiber customer who’s had this experience. At least 50 Morgantown-area residents have contacted local and state officials or spoken on social media about the company taking money from them without permission. Taken together, they say ClearFiber overcharged thousands of dollars, giving many of them credits only after they’d hounded the company for weeks. Some customers never got all of their money back.

But the paper trail of alleged misconduct left behind by Chad Henson, the owner of the company that publicly goes by ClearFiber, extends beyond billing problems. In the Morgantown area, records show customers and other businesses have accused Henson’s companies of property damage and not paying their bills. And before that, Henson’s companies were the subject of similar accusations in the Mid-Ohio valley.

Despite this, ClearFiber easily cleared the few regulatory hurdles required to operate in Morgantown and obtained over $2 million in state and federal grants before filing for bankruptcy last summer.

Henson did not respond to multiple requests for comment and a detailed list of questions for this story. In the past, the Wood County native has talked about working in telecommunications as his passion. In a YouTube video from six years ago, he described installing high-speed internet for a mother of four whose daughters were more excited to get the service than a planned trip to Disney World.

“I always thought that was really cool and always resonated with me because we were changing people’s lives,” Henson said in the video. “Not just giving internet service out to people who may or may not have it but also changing their lives for the better — getting them connected like everyone else can.”

“And at first I didn’t think much about it,” she said.

But then it happened again and again, until ClearFiber had hit Davis with nearly $400 of unauthorized charges. And despite repeated calls and emails to the company, she had no luck figuring out why.

“I would call over and over again, and every time I clicked the button to talk to billing, I would get hung up on,” she said.

Despite this, ClearFiber easily cleared the few regulatory hurdles required to operate in Morgantown and obtained over $2 million in state and federal grants before filing for bankruptcy last summer.

Such excitement is common among Henson’s customers in West Virginia, where nearly a fifth of residents don’t have high-speed internet. Among those who do, prices are high and quality is inconsistent. State lawmakers have tried remedying this by knocking down regulatory hurdles, hoping it would lead to more competition and broadband expansion.

But they’ve also created a system where hopeful internet providers face little scrutiny before setting up their businesses — despite supplying a service that has become essential for life in the modern world.

‘I for the first time, saw how evil the business world can be’

On a night in February 2017, Henson stood at a lectern before the Morgantown City Council. He was seeking a franchise agreement: a contract that would give him permission to install fiber along city-owned roads, so he could hook up more customers and make more money selling ClearFiber’s internet service.

The council’s chamber is formal, paneled in dark wood. Casually dressed in an untucked button-down, Henson presented his case for both ClearFiber and himself, as captured in a video from that evening. He was a family man and a local business owner, he told council members — not an out-of-state telecommunications conglomerate.

“I have a baby on the way and a wife that lives here as well, and we really wanted to start something here in Morgantown,” he said.

He assured the council ClearFiber would provide unmatched speeds at affordable prices. Some were skeptical.

“I don’t mean to make you uncomfortable, but you’ve told us about your business, and you told us about your proposal,” Councilmember Bill Kawecki said to Henson. “Now tell me about your background — why we should believe what you’re telling us.”

“So I’ve been doing this for 11 years,” Henson started. “We have people on our team that’ve been doing it even longer. So I’ve really surrounded myself with —”

Kawecki interrupted.

“No no, when you tell me you’ve been doing it, how have you been doing it? This is an interview.”

Henson laughed, then began speaking more slowly. He didn’t name any of his previous employers, while explaining that his experience doing “behind the scenes stuff” for a phone company helped him network and launch himself into the fiber and internet world.

“When I got to Morgantown in January of last year, 2016, I wasn’t sure exactly how I wanted to do it, but I knew I really wanted to make a difference in Morgantown and also create a lively business of my own,” he told council members.

Henson didn’t mention this wasn’t his first attempt at starting a business. By the time he found himself before the Morgantown City Council in 2017, he had already spent nearly seven years owning and operating telecommunications companies in the mid-Ohio Valley. As he detailed on his personal blog, the companies were connected to Henson, LLC, which he said he started from his college dorm room at Wheeling Jesuit University, since renamed Wheeling University.

He didn’t tell council members about his companies Kvant, Smart Networks or Towerlink, all now defunct. And he didn’t mention his most recent failure, ZaZoom, which he blamed on corporate competition. “I, for the first time, saw how evil the business world can be, and how things can turn from great to awful overnight without any wrongdoing,” Henson wrote on his blog.

But records contradict Henson’s description of the reason ZaZoom failed.

When Joyce Johnson met Henson in the summer of 2015, she was a 66-year-old retiree living on a fixed income amid rolling green farmland just outside of Marietta, Ohio. It’s a place where cell phones are likely to lose signal, and people desperately wanted the high-speed internet offered by ZaZoom.

Johnson got her internet through Suddenlink — and, as she later told law enforcement, Henson came to her with a proposal: If she let him temporarily hook ZaZoom’s system up to her connection, he’d pay her monthly bill.

She said she didn’t know the reason Henson wanted to do so was to tap into Suddenlink’s connection, split off some of the bandwidth and sell those reduced speed internet connections to his own customers — and according to Suddenlink, he was doing this without the company’s permission.

By the time Johnson agreed to this deal, Henson’s other companies were already facing financial problems. Courts had ruled against them in two cases, for a total of more than $40,000. First, one of Henson’s companies defaulted on a bank loan and almost immediately agreed to pay what the plaintiff alleged was owed. Then, a landlord and realtor alleged one of Henson’s companies had repeatedly failed to pay the rent on office space, which the company vehemently denied.

Soon, Johnson found herself among the growing group of people Henson’s companies owed money to.

For six months, she said Henson didn’t pay her a dime. Meanwhile, ZaZoom employees urged her to upgrade her Suddenlink connection to a faster speed and buy extra equipment. Her Suddenlink bills became increasingly expensive, and by February of 2016, ZaZoom owed her nearly $1,000.

Henson eventually paid her several hundred dollars after she threatened to cut the line connecting ZaZoom’s system to her house. She received more money after a neighbor who worked for Henson advocated on her behalf. But she said Henson never paid her the full sum she was owed.

And soon she found out that despite Henson’s assurances, Suddenlink hadn’t approved his scheme.

“I got this letter, telling me I was in deep trouble through the federal government, and that I could be going to prison,” she said. “Well, that really upset me because I thought, ‘Well now, wait a minute, I didn’t do anything.’”

The letter was addressed to Henson, but mailed to Johnson’s home. It alleged that Henson was in violation of federal and state laws that prohibit stealing cable services.

Johnson ultimately didn’t face legal consequences for letting Henson tap into her Suddenlink connection, but the company did disconnect the internet from a box they suspected was servicing nearly a dozen ZaZoom customers. And when the Marietta Police Department and the Washington County Sheriff’s Office began investigating the theft, they heard other concerns from frustrated employees.

Multiple employees told law enforcement that Henson hadn’t paid them in weeks. One employee said he was hired to provide connectivity and technical support for several companies under Henson, LLC, but almost immediately had been “inundated with customer complaints, with some being without the service for months while still being billed.” He also told police Henson regularly called customers “whiners,” “never satisfied” or “troublemakers” when confronted with questions about the issues they kept facing.

Ultimately, county attorney Kevin Rings declined to file any charges — a decision his successor later attributed to a lack of resources.

“I hope that someone has a better opportunity to prosecute him than we did here,” current county prosecutor Nicole Coil wrote in an email last September.

And by the time the Marietta and Washington County investigation finished up, Henson had already moved to Morgantown and started ClearFiber. Although Morgantown officials were starting to learn more about Henson’s history, they were powerless to stop his company from operating there.

City officials’ hands are tightly tied when it comes to regulating internet companies: federal law says they can’t prohibit a company from providing internet service or deny the company access to city-owned roads.

All cities can do is impose reasonable rules for internet companies to follow, such as requiring them to pay fees, repair damages or obtain certain documents. And if companies like ClearFiber don’t follow through, small cities and towns often struggle to enforce those rules.

‘We’re not talking internet service’

Nearly five months after his presentation to the Morgantown City Council, Henson stood in the same room, facing his biggest hurdle yet: a hearing with an administrative law judge from the state Public Service Commission.

It was July of 2017 and Henson needed to convince the agency to give him a certificate of convenience and necessity, a state regulatory document that would, among other things, grant ClearFiber some of the benefits given to utilities like electric, water or telephone companies. But despite the significant power this certificate would give him, the process was little more than a rubber stamp — and an unintended consequence of conflicting standards between different government agencies.

At first glance, it doesn’t make sense that Henson would need or want this certificate to provide internet service. Multiple West Virginia regulatory experts stressed that the agency doesn’t consider the internet a utility and doesn’t regulate it. Even the PSC’s judge was confused when Henson’s attorney said he was seeking the certificate to provide internet service, but then clarified the reason.

“We’re not talking internet service because the Commission has no jurisdiction over internet, but we’re talking about telecom authority,” said Administrative Law Judge Matthew Minney, according to a transcript from the hearing.

When Henson first came to Morgantown, the state Division of Highways required internet service providers to have the PSC certificate before they could install broadband along the nearly 90% of West Virginia public roads that are owned by the state, according to an agency manual.

So even though the PSC didn’t and still doesn’t regulate broadband, at the time, ClearFiber getting this certificate greatly expanded the number of places the company could provide internet service.

The PSC hearing was also one of the only opportunities laid out in state law for such early regulatory scrutiny. But Minney never asked about the joint investigation or allegations of wrongdoing against Henson’s old companies, which were already reported on by newspapers and had been mentioned to a Morgantown city council member months before. And he never pressed Henson to elaborate on the sparse management biography submitted in his certificate application — a biography that never mentioned by name a single company where Henson previously worked.

A PSC spokesperson declined to comment when sent a detailed list of questions about the scrutiny it applied to Henson’s application, and Minney didn’t return requests for comment. But within a month and a half of the hearing, Henson had his certificate. The agency declared that ClearFiber demonstrated “the technical, financial and managerial fitness” needed to provide the proposed services.

Henson had knocked down one of the few hurdles in his way with relative ease. In this case, the process didn’t provide much scrutiny for a business with red flags in its record. Today, that hurdle no longer exists.

For years, West Virginia lawmakers have pursued a tactic endorsed by experts studying communities around the world. They’ve reduced certain types of broadband regulation, arguing this is the way to attract more internet service providers, increase competition and lower prices.

But they’ve also passed legislation that changed the requirements for companies seeking to install broadband along state-owned roads. Now, these companies don’t need a certificate from the PSC.

“Removing the requirement for a certificate of convenience and necessity was an effort to make it easier and faster and less expensive to deploy broadband in the state of West Virginia,” said Del. Daniel Linville, R-Cabell.

Linville, who said he didn’t think keeping the requirement would have reigned in alleged bad actors like ClearFiber, has been a leader in lawmakers’ efforts to knock down regulatory hurdles. He’s also helped to strengthen broadband-specific consumer protections, such as passing legislation that says customers must be compensated if they lose internet access for more than 24 hours through no fault of their own. But he maintains that in West Virginia, consumers need a variety of internet options, and the companies shouldn’t be regulated by the PSC.

“The Public Service Commission generally regulates entities which are monopolistic,” Linville said. “And let’s be frank, what’s the approval rating of your water company, your electric company, your sewer company, or the telephone company?”

But some say this stance ignores the fact that broadband is already effectively a monopoly in the U.S. Across the country, more than a fifth of consumers have only one option for internet service, according to research from Consumer Reports. Another third have a maximum of two.

Industry representatives typically object to regulating the internet like a monopolistic utility, citing concerns about rate regulation. But in the past, the federal government has regulated internet companies without establishing maximum prices. And states could do something similar right now, according to currently settled law.

Regulating the internet like a utility can ensure certain quality standards, said Jenna Leventoff, former senior policy counsel at Public Knowledge, a nonprofit that promotes an open internet and access to affordable communications tools.

Leventoff gave the example of many internet companies beginning to retire their old 3G networks. Right now, they can do so with few consequences, even if, for some Americans, this is the only network available in their area. But if West Virginia considered the internet a utility, a state agency, such as the PSC, could require the state’s internet service providers to replace old networks with something as good or better.

“At the end of the day, companies are out to make money for their shareholders, and they’re not out to look out for what’s best for consumers and the public who, at this point, you need internet to function,” Leventoff said.

For now, most internet consumer protection issues fall to the West Virginia Attorney General. But that doesn’t happen until enough damage has been done for consumer complaints to start rolling in — as they did against ClearFiber. A spokesperson for the Attorney General’s Office declined to comment about those complaints.

‘I am in desperate need of the money’

When ClearFiber first announced it would begin offering service in the Morgantown area, many people were as excited as Tiphani Davis to have a locally-owned alternative to big internet monopolies. Some begged the company to expand in their neighborhoods.

“Please . . . come to Cheat Lake area! I’d love to tell Comcast adios!” one person wrote on the company’s Facebook page.

“Hell yes!!!!! Bring it baby bring it!! The hell with the competition!” said another.

Of the approximately two dozen ClearFiber customers Mountain State Spotlight contacted, most were pleased with their actual service. Several said ClearFiber was the fastest internet they’d ever had — up to a gigabyte per second — and at about $50 a month, it was much cheaper than the other options.

So when ClearFiber started overcharging customers, many were inclined to defend the company. But for customers who never received full refunds, the mistakes were less forgivable.

Former Morgantown resident Josh Baldwin said the more than $420 ClearFiber charged to his credit card over a period of eight months was money he needed after a tooth infection.

“Hey, following up again,” he texted ClearFiber’s customer support line. “I’m contacting frequently because I am in desperate need of the money. I have accrued some medical debt that I am having trouble managing and the [money] would really help right now.”

In total, Baldwin sent ClearFiber over 100 text messages over several months. Nearly a year later, he has yet to get any money back.

ClearFiber also drew complaints from people who were never its customers. Dozens of Morgantown-area residents complained about the company’s workers hitting utility lines, leaving sidewalks destroyed and taking months to complete repairs, according to government emails, social media discussions and court records.

Westover resident Jessica Bragg spent nearly a month cleaning sewage water out of her basement, after ClearFiber bored through her sewer pipe while installing fiber underground.

“All I did was use some Dawn and some high-pressure hose to just push it out,” Bragg said. “Not much I can do. I don’t have that kind of money.”

In many cases, city taxpayers ended up initially picking up the tab for damage, though a judge ultimately ordered ClearFiber to pay the Morgantown Utility Board nearly $30,000 in damages.

But private companies and the government have also demanded much larger sums from Henson and his companies — totaling nearly $4 million.

Records show numerous judgments and tax liens against Henson personally and his companies. A Monongalia County Circuit judge ruled Henson personally owed a private jet charter company more than $73,000. The IRS has filed more than $100,000 in federal tax liens against him. There have been more than a million dollars in judgments in cases against Henson’s old companies from the mid-Ohio Valley — ZaZoom, Smart Networks and Kvant.

And last summer, DBI Networks, LLC, which holds the trade name for ClearFiber, filed for bankruptcy, saying it had just $60 in its checking account. Meanwhile, the company reported in its own bankruptcy filing that it owed contractors, some of them small, family-owned businesses that had provided ClearFiber with equipment or construction services, nearly $2.3 million.

That didn’t stop ClearFiber from announcing plans to expand into several new Morgantown neighborhoods on its Facebook several months later. When asked how this was possible, given the bankruptcy filing, the company denied that it was filing for bankruptcy, and said it wasn’t connected to DBI Networks. It was a different company: ClearFiber Inc.

Now, while DBI Networks makes its way through the bankruptcy process, ClearFiber is continuing to operate in Morgantown. And Henson is actively pursuing another market under a different company name.

Last year, less than two months before DBI Networks filed for bankruptcy, Henson started another business in nearby Fairmont: WV Fiber LLC.

To boost that business he reached out to Jeff Dreyer, a Morgantown videographer who previously made a promotional video for ClearFiber. Like many of Henson’s contractors, Dreyer struggled to get Henson to pay him what he was owed.

But when Henson approached him about a new opportunity, Dreyer saw a chance to recoup some of his money. It was an easy job, he said, one without much work. The video he had made previously was still useful — except for one part. The logo for ClearFiber, a company that had left behind a trail of frustrated customers, stiffed contractors and broken promises, needed to go. So, Henson asked Dreyer to create a new logo for WV Fiber and slap it on that same, old video.