Sorry didn’t seem to be the hardest word for O2 UK CEO Ronan Dunne after as many as 7.6 million customers were hit by the operator’s 24-hour service disruption on 11 July. Dunne conducted several apologetic media interviews in the wake of angry customers being left unable to make calls, send texts or access the internet on their phones. He admitted he was embarrassed by the outage, describing it as a ‘shocker’ for the operator. Investigations are ongoing into its exact cause, with Dunne saying it was due to part of the network that manages the registration of handsets going down.
Whether customers will be placated by the apology remains to be seen. Dunne promised the operator would make it up to them ‘in an O2 way’ and was quick to reveal what that meant. Last week, the operator said all affected contract customers would get 10% off their July bill, with prepay customers getting an extra 10% on their first top-up in September. In addition, the operator is giving all 23 million customers a £10 voucher, redeemable in September, to spend in store.
The outage caused a stormy reaction on micro-blogging site Twitter and consumers were leaving angry comments on www.mobiletoday.co.uk at a rate of one per minute in the 24 hours after the service went down. However, it will be in Telefónica’s results in October that the true effects of the service failure will be seen. Strategy Analytics director Phil Kendall said: ‘My sense is customers only vote with their feet if there are consistent problems with their operator or the operator’s response has been arrogant. There could be a short-term impact of people who were going out and buying phones in the weeks after the outage. They may think twice about sticking with, or signing up to, O2.’
Emotions run high
Rival operators were privately sympathetic to O2’s plight. When asked if its customer service teams were working to capitalise on the outage, one said: ‘No, because it could happen to any of us.’ The source added that the service failure and the subsequent public reaction reinforced just how important a role mobile plays in people’s lives. ‘People get very emotional when this happens and think it’s a big deal.’
Steven Hartley, practice leader at Ovum’s telecoms strategy team, agreed: ‘What’s quite interesting about this and other recent outages is the customer response, which is, “this shouldn’t have happened”. That speaks volumes for the demand side. People expect this level of customer experience now – they pick up their phones, make calls, send emails and browse the internet.’
Hartley claimed the outage, along with other recent global disruptions [see box], raises the question of whether operators are investing enough in their networks. Speaking more broadly about the global service failures, he said: ‘It’s a case of financial officers being a little reluctant to invest what the engineers are saying would be the optimal amount. You have to compromise in these discussions, but are these expenditure decisions coming home to roost? This is not an isolated incident – this is happening around the world to every operator.’
In the UK, operators have been vocal about how much they invest in their networks. But Hartley argued that throwing money at infrastructure is not the only solution. He said: ‘Under-investment is one side of the debate, but the other and biggest side is that these are incredibly complicated systems. Things like 3G having to talk to 2G so customers can seamlessly move between the two networks are very complex. The likelihood something can go wrong will only increase as networks get more sophisticated… I have a certain amount of sympathy for operators. If they invest heavily, then their profits get squeezed. If they don’t, then these kind of things can happen.’
A global problem – other outages
France Telecom, France, July 2012
What went wrong? France Telecom CEO Stéphane Richard blamed the outage on a software problem, which prevented 26 million customers from making calls or sending messages earlier this month. It was the biggest disruption to the French mobile industry in eight years.
How much did it cost? Richard says the outage will cost the operator ‘several dozen million euros’. France Telecom customers will get a free day of calling in September by way of an apology.
T-Mobile, US, July 2012
What went wrong? Customers across the US were hit by a data outage earlier this month. T-Mobile subscribers were unable to access 3G services for several hours but the network has not revealed what caused the disruption.
How much did it cost? T-Mobile has been quiet on the issue of compensation. Many observers said the outage underlined how important it was for the operator to upgrade its network after its proposed takeover by AT&T fell apart.
Vodafone, Australia, April 2011
What went wrong? A network fault in an exchange was blamed for the operators’ SMS service going dark for three days, leaving thousands of customers unable to send texts. Last month, Vodafone customers across six states were without data services for around an hour.
How much did it cost? Vodafone offered angry customers 12 hours of free texts by way of recompense.