This error did cause me headache, after try after try. I found you need to turn off the proxy.

if your code is behind the proxy then pass


use this part before getresponse

reqFTP.Credentials = new NetworkCredential(Username, Password);
reqFTP.KeepAlive = false;
reqFTP.Proxy = null;

Same to the web service.

WSSimcentral.UtilityWebService ws = new WSSimcentral.UtilityWebService();           
ws.Url = "http://xxx/_layouts/UtilityWebService.asmx";

ws.Credentials = System.Net.CredentialCache.DefaultCredentials;
ws.PreAuthenticate = true;
ws.Proxy = null;