Telco 'can't afford third failure'

CEO of the Telecommunications Users Association of New Zealand Ernie Newman said that Telecom cannot afford to have this happen a third time. Photo / Supplied

Pressure is on Telecom to reassure consumers that the XT mobile network is safe - with users group TUANZ warning that another failure would be catastrophic.

"The first time before Christmas people were forgiving. This week has made people think. But they cannot afford a third time," said Ernie Newman, chief executive of the Telecommunications Users Association of New Zealand.

He said a promised inquiry into the failures had to be completed swiftly to show that XT did not have inherent problems that would lead to more outages.

Telecom chief executive Reynolds had to ensure that the inquiry was transparent and independent, and TUANZ was seeking representation, Newman said.

"It has to ensure it offers a definitive explanation and solutions for the network's problems."

Telecom says the inquiry will examine how the problems occurred and will delve into the fast-track building of the network with the multinational firm Alcatel-Lucent.

The inquiry was being set-up yesterday and details would be announced as soon as possible, Telecom said.

Spokesman Mark Watts said Reynolds and other executives have been "thumping tables" during the lingering South Island outage

"But finger pointing is not an issue for us at the moment," said Watts.

Even if the technical problems are shown to be solved for existing customers and there is shown to be no underlying vulnerability, Telecom has taken a hit trying to attract new customers to the XT network. The brand has been damaged.

"After marketing XT as a Rolls-Royce brand, Telecom will be looking at ways to rehabilitate it in consumers eyes," said telecommunications analyst Rosalie Nelson.

The impact on the customer churn is unclear. Many XT business customers and potential customers are hooked into deals of two and five years.

Auckland University of Technology senior marketing and advertising lecturer Dave Bibby believes the XT brand has taken a serious hit.

"They spent a lot of money, built up a lot of awareness through the marketing campaign, then had system failures," he said.

There was a chance that with a good compensation package it could buy them back. Auckland University senior marketing lecturer Mike Lee said that XT might be protected because of the scale of the Telecom brand.

Reynolds has said no stone would be unturned by the independent inquiry finding out what had caused the failures.

"You should not underestimate the fire in [Reynolds'] belly on this one," said Watts - who has been part of the crisis team working on the problem.

TUANZ's Newman said the impact on XT uptake would not be immediately apparent. "People will be asking is this going to happen again and is XT inherently unreliable.

"I think there were people who were seriously looking at changing who will not be doing that now, but I don't think the damage is gong to be catastrophic."

Telecom shares closed down 3c at $2.38 yesterday.