Mobile outages symbolic of Telecom's malaise

I had a sense of deja vu today as I walked down Lambton Quay repeatedly attempting to dial a number on my Blackberry.

XT Network: crashes more often than Richard Hammond
XT Network: crashes more often than Richard Hammond

Instead of a ringing tone, dead air was all that could be heard in my phone’s earpiece. The words “call failed” kept flashing up on the screen. A few things go through your mind on such occasions: have I paid my phone bill? Is there a massive amount of concrete nearby blocking the mobile signal? Is my Blackberry knackered? Since last month there’s another item to add to that list – has the XT network fallen over again?

Telecom’s massive outage on its XT mobile network today came barely six weeks after the last one similarly knocked out service from Taupo south, severely inconveniencing me and thousands of other customers for over half a day. If the first big outage shook faith in the reliability of Telecom’s new mobile network, the second so soon after with undoubtedly leave many customers considering a move to Vodafone, or at the very least a retreat to Telecom’s more stable CDMA network.

Early in the millennium, I reported on how Telecom got itself in trouble with an advertising campaign that suggested customers could enjoy “five nines” reliability on its fixed line service. The adverts promised:

“Should our network get damaged it will usually heal itself. Should it get severely damaged it will automatically divert to a backup cable. Should that fail, technicians will divert traffic to other backup cables.”

The ads proved a headache for Telecom when angry customers who had their phone and internet service cut off rang the Telecom helpdesk asking why their connection wasn’t working 99.999 per cent of the time. Telecom tried to weasel out of that one by explaining that the reliability promise, which was a trendy thing to advertise in the telecoms and IT industries at the time, related only to Telecom’s “core” network. The myriad collection of cabinets and copper wires between its core infrastructure and you weren’t covered in the reliability promise. Problem is, its somewhere in that bundle of kit that the problems with fixed-line services often happen.

Telecom soon abandoned that ad campaign and since then has never pushed reliability as a selling point. Both XT outages involved systemic failures in Telecom’s core network, the latest one Telecom executives putting down to:

…issues with our Christchurch XT Mobile RNC switch which has resulted in the degradation of the XT Mobile Network from Taupo south between approximately 10.30am and 12pm.

The RNC is a radio network controller which is responsible for routing calls across the mobile network of cell sites.Last month, the problem was again with RNC switching, according to the National Business Review. Telecom’s mobile network architecture is flawed to the extent that if one of its two RNC switches for the country fails, the other one cannot take over for the whole country.

The XT network was meant to breathe new life into Telecom. Instead, it has come to symbolise what is wrong with the company. While I blogged a couple of weeks ago about Telecom’s impressive mobile data service on the XT network, innovative mobile services are otherwise hard to find. Telecom’s pricing for XT was also uninspiring on launch and despite the slick advertising campaign featuring Top Gear host Richard Hammond, the range of handsets offered by Telecom has been rather lacklustre so far.

Elsewhere there are signs of a company struggling to innovate:

– It was incredibly late to market with an IPTV offering, partnering with TIVO well after Sky had claimed the personal video recorder market with its successful MySky device. Word is that TIVO sales are well behind targets. While TIVO is a fantastic device (I reviewed it here), the idea that people would go to a Telecom store to purchase it is flawed. A technical glitch related to TIVO that saw Telecom broadband customers overcharged earlier this month suggests the unmetered data access associated with TIVO has been causing Telecom’s software engineers grief as well.

– Telecom completely dropped the ball in its dealings with Sky TV, shifting from having a useful bundled deal with the pay TV operator and owning a stake in the company, to having virtually nothing to do with it. Vodafone was quick to exploit the fractured relationship, offering its customers the MySky recorder at preferential pricing.

– Telecom’s play at offering a suite of services to the small business sector has hardly set the world alight, despite costly sponsorship of dotcoms like and which are focused on small, innovative New Zealand businesses.

– Consumer VoIP services are missing in action despite claims back from executives back when I was reporting on Telecom for the Herald that they were on the verge of being released.

– Telecom has missed the boat with retail product bundles so many times, its not even funny. Best example – not going head to head with Vodafone’s Best Mate deal until that product had been in the market for years. Telecom has an alternative available now, but sadly the customers have long departed for Vodafone.

The list goes on and on. Telecom seems so drained from years of fighting regulators, manipulating customers with advertising that breaches the Fair Trading Act and cleaning up after fiascos like Xtra Bubble, that it is too timid to come out with innovative products and too unsure of itself to deliver them effectively. All the while, Telecom has lost market share on all fronts – mobile, broadband, phone packages and tolls. The only bright spot has been its IT services division Gen-i, but the shine has even come off that. All up, Telecom’s strategy and vision when it comes to innovation seems to make about as much sense as the sloppily drawn asterisk that serves as its new logo.

It’s only hope to develop an edge that will stop its business and consumer customer bases from eroding completely is to get involved in a meaningful way with the Government’s national broadband plan. That will probably force Telecom to break itself up, so-called structural separation, which the Government would require of it. Telecom has resisted doing that so far – but it doesn’t really have much of a choice any more with numerous competitors angling in on the fibre roll-out.

Telecom boss Paul Reynolds is reportedly “angry” about the latest XT outage and has commissioned an independent review. Good job. But he’s likely to be increasingly disillusioned with aspects of Telecom and the legacy he was left by his predecessor Theresa Gattung, who promises to soon release a “no holds barred” memoir of her time at the top of the country’s largest listed company. If it lives up to the promise, it could well serve as a textbook case in how bad technical decision making and lack of innovation and vision can topple a behemoth.


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