Telecom's international call for help

Alcatel-Lucent CEO says network problems have never been seen before

The company behind Telecom's troubled XT network is flying in dozens of its top experts from around the world in a bid to fix the beleaguered system.

The government has branded the network problems as "terribly embarrassing" and has asked for an urgent report on the fault.

Communications Minister Steven Joyce has warned he is prepared to regulate cellphone companies to ensure 111 calls are a priority when networks fail.

The latest network failure has resulted in a second scalp. Telecom's second highest-ranking executive resigned yesterday.

Telecom has offered disgruntled customers south of Taupo a $10 million compensation package. It follows a $5 million payout at the start of the month.

It also vowed to try to keep customers, saying it would talk directly to each one who wanted to jump ship to other providers.

Ben Verwaayen, global chief executive of Alcatel-Lucent, which built Telecom's XT network, said from New York yesterday that the problems in New Zealand had never been seen before.

"Apparently there are things in New Zealand that are really specific and we need to understand that better than we have done. It is our responsibility to make sure we rectify the situation as quickly as possible."

The company had used the same technology in other countries successfully, he said. A team of experts was on its way to New Zealand, but was "not the cavalry".

"I apologise to the customers of the network. They have the right to expect a flawless service — that is what they are paying for. We have let Telecom ... down on that and we are going to make sure we rectify it."

Telecom chief executive Paul Reynolds said saying "sorry" was not good enough.

"Actions have to speak louder than words. They're [Alcatel] on notice because it has to get fixed. This works well in the rest of the world. We want to know why it doesn't [work] in New Zealand."

As compensation XT customers south of Taupo will save 33 percent on their monthly plans for three months. Pre-paid customers will get a 33 percent bonus when they top up. Business customers will be offered a 50 percent credit.

The latest fault exposed a glitch in 111 cellphone coverage that left some customers unable to make emergency calls, including one trying to report a serious attack.

Although Mr Joyce warned of regulating to ensure 111 calls got through, he said there was little the government could do to address continuing faults in the XT network because Telecom was a private company. But he was seeking urgent assurances that 111 calls would be possible on the XT network if there were more failures.

Monday's fault did not affect data and text messaging.

Concern about the ability to contact emergency services was highlighted after a Christchurch man witnessing an attack on an Asian person by four skinheads on Monday could not call 111.

Reynolds said it was the only case he knew of XT customers being unable to dial 111 during the network disruption.

Cellphones usually switch automatically to other providers for 111 calls if the host network is down, but Telecom said that only happened if the network failed altogether.

The problems led to the resignation of Telecom's chief transformation officer, Frank Mount, yesterday. Alcatel's New Zealand head, Steve Lowe, resigned on Monday.

Mount led the team that helped Telecom select French contractor Alcatel to build the $574 million XT network.

But Dr Reynolds said he was determined he would not be the next victim of the failures.

"I'm determined to get this fixed. I feel like as CEO I'm here ... to lead this organisation through those tough times."

Telecom has changed its earnings forecast for the full year from the "bottom half" of a $400 million to $440 million range to the "lower end".

Its shares fell 6c, 2.5 percent, to $2.30 yesterday.

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