How Telecom turned the best news in years to a PR disaster

9:30AM Friday May 8, 2009

I'm essentially a hopeful sort of character. I like to give people the benefit of the doubt and a second chance. I believe most people do their best and mean no harm. I believe most people in most large companies want to be proud of doing something useful that makes their customers happy. Most are talented and work hard. I believe in cock-ups rather than conspiracies.

So in recent months I became hopeful again that Telecom had turned the corner. It was about to trump a competitor with a flash new piece of technology and it's initial marketing efforts looked snappy and remotely successful. I'm a big fan of Top Gear and thought the Richard Hammond ads for the new XT network were a great idea to emphasise the speed of the new network.

Then Telecom brought forward its launch date to May 13 to beat Vodafone's new network. This was a surprise. New technology launches are often difficult, late and over budget. An early launch seemed to me like Telecom might be changing its spots from being a lumbering and monopolistic beast into something a bit more humble and fleet of foot.

I was even beginning to wonder if I should change my mobile phone and data set-up to Telecom. One of the reasons I was having my doubts about Vodafone was I had noticed a significant deterioration in Vodafone's performance in the last couple of months.

Data speeds on my Vodem were extraordinarily slow, particularly in Wellington. I tweeted about this slowdown about six weeks ago and had noticed a significant amount of noise about Vodafone being slow and patchy in the twittersphere and blogosphere.

So this week's news that Vodafone was accusing Telecom of interfering with Vodafone's signal with its new XT network was explosive. Surely Telecom would have put all the correct filters on its new equipment so as not to interfere with Vodafone? Surely it would leave itself enough time to do this? Surely the top execs at Telecom knew all about this potential risk and were right on top of it?

Surely Telecom wasn't going to cock up what seemed like its best news in years?

Yep. It surely did. This has turned into a full PR disaster and Telecom looks like a bumbling,out of touch, slow-moving behemoth all over again.

It was clear from the initial comments in court that the dispute was over the lack of filters on Telecom's new network and how it was Vodafone that was experiencing customer complaints and losing customers. 

Within 48 hours Telecom and Vodafone had settled and Telecom had delayed its May 13 launch until the end of May while Telecom put the necessary filters on its network.

All those billboards with Richard Hammond pointing to www.testdrive.co.nz and naming the launch date as May 13 were now misleading and just plain embarrassing.

The comments from Telecom CEO Paul Reynolds after the settlement were surprising in their stridency and in their tone of denial and downright frustration. 

Over the last year or so I've heard positive comments from many people about Reynolds and how he was changing the culture at Telecom. I have my doubts about this. I'm a Telecom customer and my experience is that the performance of Broadband, has, if anything gotten worse.

My wife and I pay $79 a month for an upgraded broadband connection called the 'Pro' plan with uncapped speed and 40GB of data a month. It is crucial in the way we run our small businesses. But we have had multiple problems with the connection. I'm now almost on first name terms with the help desk people in the Philippines. At one stage I had to virtually beg an engineer to come out and fix the woeful performance. They did after much cajoling and then charged us for a new modem that they said they would give to us. 

Reynolds was also surprisingly slow to shut down Telecom's online retailing debacle Ferrit. It burned through millions of dollars more of wasted television advertising before the plug was pulled over a year after Reynolds arrived. Ralph Brayham, the man behind Ferrit, is now leading Telecom's broadband division. 

So I have my doubts. I thought I'd give Telecom and XT one more chance so I went to www.testdrive.co.nz to see how fast it would be. Using my Telecom broadband connection I navigated to the site and waited more than 20 seconds to see the "full rich experience" of XT.

After 20 seconds this message popped up: "Your internet connection appears to be too slow for the full rich experience, click ok to continue loading or cancel to load the dial up version"

I then went to this site http://www.xnet.co.nz/speedtest/ which you can use to test the speed of your broadband connection. My connection speed was 165 KBps downloand and 86 KBps upload. Telecom never actually promise anyone a particular speed with its broadband service, but the maximum download speed is 7.6 Mbps. We were getting less than 2% of the maximum speed.

Telecom still has a whole lot of work to do to convince most New Zealanders it has changed its spots. Its behaviour in the last week suggest it has hardly started the process.

A quick disclosure. I worked for Telecom in 2005 as the Managing Editor of XtraMSN, which was the news and entertainment part of what was then Xtra. I left in 2006 on good terms after Telecom essentially decided it didn't want to be in the news and entertainment business anymore and moved to offload it to Yahoo. I worked with some very talented and dedicated people there. Many have since left, but I'm sure Telecom can turn it around. But there is still an awful lot of work to do.

Bernard Hickey

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