Anger management therapy set to soar in New Zealand

Heard the one about Britain’s Prime minister, Gordon Brown, beating up his staff? (allegedly!). Apparently he flew into a rage and grabbed some hapless official by the lapels when told that one of his equally hapless departments had lost a disc containing the personal information of 20 million British subjects.

Poor Gordon – it’s very frustrating being responsible for something but having little actual visibility or control over it. So spare a though for the Telecom New Zealand CEO, Paul Reynolds, whose multi-million dollar, state of the art HSPA mobile network keeps falling over for no apparent reason.

The XT network, commissioned only last year, has been fraught with problems turning itself off for no apparent reason not once, but multiple times. Every time it has happened Reynolds has had to apologize profusely and offer disgruntled customers compensation.

Even the NZ government is starting to show concern and the Communications and Information Technology Minister, Steven Joyce, has ordered Reynolds in for a second “please explain”.

Reynolds is one of the most experienced and astute executives in the industry, so probably shares the Gordon Brown level of frustration, especially as TNZ neither built or runs the network. The builders and outsourcing managers of the XT network are actually  Alcatel-Lucent - whose CEO, Ben Verwaayen, is equally used to network teething problems in his days running KPN and BT and co-incidentally was Reynolds boss at BT until a couple of years ago - has committed to providing the full global resources of his company to get the issues fixed.

Heads have rolled with Steve Lowe, CEO New Zealand & Pacific Islands at Alcatel-Lucent, and Frank Mount, TNZ’s CTO, both leaving their jobs.

Reynolds yesterday announced a range of measures aimed at restoring customers’ faith in XT saying, “For too many of our customers, we have not lived up to the promises we made about XT when the network was launched. So that’s why we are taking action on a broad range of fronts.”

So what’s going on here? ‘Design, build and operate’ contracts are becoming fashionable in an industry that once thought its whole raison d’etre was running networks. Indeed TNZ pioneered the outsourcing approach that has now become the industry’s latest poster child. But outsourcing has a chequered history across many industries, especially where both buyer and supplier are dealing with new approaches and nobody quite understands all of the implications. What are the service level agreements? What is the escalation route? How do you resolve things when they go wrong – as in this case?

No wonder Reynolds also announced that he was making “significant changes to the way in which the XT network will be managed covering the operation and management of the network”

It seems likely that customers that signed contracts with Telecom NZ’s XT network will be allowed to break them. No doubt, competitors will welcome them with open arms. And for sure, there are bound to be a lot of heated words between TNZ and ALU over the terms of their contract. 

There will also be lots of ‘I told you so-s’ being uttered around the industry about the wisdom of network outsourcing and this could be a major setback for all parties concerned. The respective PR machines will have their work cut out for them.

But until the source of the network problems can be found there is no use finger-pointing.  TNZ was the true pioneer of outsourcing its network operations for earlier generations of networks to Alcatel-Lucent some years ago and the relationship has apparently worked well up until now.  It will be easy for critics of outsourcing and third party facilities management to use the current problems as a stick, but that may be a little premature.

It does, however, draw attention to the business model and particularly to issues of problem and dispute resolution.  On the surface, it would appear that of the two most experienced players in the industry, Reynolds and Verwaayen, are doing everything in their power to get things right but in the background there will certainly be some soul searching as to where the lines are drawn in terms of responsibility.

There is no good news here for any of the parties, or the industry as a whole. Let’s hope that once the issues are resolved any lessons learnt can be shared with the rest of the telco community in line with our own objectives here at the TM Forum.

And let’s hope that Paul (who stands at least six foot six) leaves Ben’s lapels attached to his jacket!