Editorial: Telecom wide open to punishment

It falls to Telecom's customers to punish the company if they so wish. Photo / Northern Advocate

After a series of commercial and public relations gaffes last year, Contact Energy lost about 41,000 customers - roughly the population of a city the size of Wanganui - to its competitors. It has since worked hard to get them back, offering pledges on electricity pricing and other incentives. Now, Telecom finds itself in similar territory following the fourth collapse of its much-touted XT mobile-phone network. Its plight is probably much worse, however, if only because mobile phones have become such an important tool of business and communication for many people. Few things are guaranteed to raise ire as much as a useless piece of expensive technology.

This has occasioned much waving of hands. Ernie Newman, of the Telecommunication Users Association, said that if Telecom did not do something drastic to help its customers, it was time for the Government to step into what was a national economic issue. But such a situation would exist only if Telecom enjoyed monopoly status in the mobile-phone market. Such is not the case, with Vodafone and the fledgling 2degrees offering competition. That means it falls to Telecom's customers to punish the company if they so wish.

Undoubtedly, there is cause for grievance. Telecom's policy of out-sourcing most of its services may have created a lean entity but it also introduces real risks in terms of service and, ultimately, reputation. It increased that risk when it massively hyped the introduction of the $574 million XT network. Anything less than perfection was bound to be a disappointment, especially as New Zealanders pay some of the highest mobile-phone rates in the OECD. Four outages since Christmas raise questions not only about the robustness of this system but the reliability of future Telecom initiatives.

Two resignations have followed the latest collapse, which affected customers from Taupo south. The New Zealand chief executive of Alcatel-Lucent, which built the XT network, went, to be followed by Telecom's IT chief, Frank Mount. Such accountability is welcome, even if there was a token element to the resignations. But it will take more than this to assuage Telecom's many frustrated mobile-phone customers. Most were more interested in the company's $10 million compensation offer.

That gesture indicated how much the stakes have risen. After a prolonged outage in late January, Telecom provided a $5 million package to the 220,000 or so clients who lost cellphone services. Most appeared happy at the time, although some reckoned the money would be recouped by higher charges. But any feeling of gratitude has surely been severely eroded by the latest collapse. There comes a point when nothing can compensate for a piece of equipment that does not work when needed. Telecom's customers will be weighing up that frustration against the compensation on offer and the service and prices offered by Vodafone and 2degrees. Quite rightly, the company seems not to be quibbling with those who wish to break their contracts. Any example of Telecom playing tough would simply invite further odium.

The credibility issues do not end with its customers. Telecom wants to be a major player in the roll-out of the Government's broadband network. In that respect, the XT woes can hardly have come at a worse time. The Government will probably view these as teething problems. But it will be harder put to extend the same generosity to the failure of back-ups when Telecom's emergency network crashed last Friday.

The ability of Telecom's customers to switch companies if they are the victims of repeated faults should have been all the incentive the company needed to quickly get its network operating efficiently. The longer the troubles persist, the more they point to more enduring problems - and to an ever-increasing flight of customers.