Telecom Refunds $8 Million for Bad Service

Gearu writes in with an article about a hefty refund coming to New Zealanders. It opens, "Telecom New Zealand has admitted it made an error with its Go Large broadband plan and is to credit customers of the service. An internal technical review of the service, launched in October, identified an issue with how internet traffic was being managed on the plan. The Go Large plan was promoted as having traffic management applied to certain applications, but since December the traffic management process had affected all forms of activity. With around 60,000 customers on the Go Large service, the refunds were expected to total $7.5 million to $8.5 million."

Comments

Telco Refunds

[Kawerau]

Please note the following is my personal opinion and the facts when they finally come out may be slightly different: Telecom NZ was originally a state owned entity that was deregulated. Once operating as a private company they aggresivly defended their monopoly position (they owned all the copper to residences) to achieve the best return for shareholders possible. They did this successfully and became the largest single company on the NZ sharemarket. In the course of their aggresive business tactics they did however do their best to extract maximum value from their customers with minimum outlay. In the area of broadband this meant placing the minimum amount of equipment in their exchanges to deal with the customer load. This was achieved through the sale of limited speed/bandwith plans and high but undisclosed contention ratios. Telecom also defended their policies to legislators using FUD and standover tactics, however late last year the government anounced that the telecom industry was going to me more tightly regulated and the local loop unbundled. As part of the process and to try and attract a greater future market share telecom announced several improved broadband plans, including the go-large plan which was uncapped on both speed and bandwith. Unfortunately in many areas this meant that with the existing high contention ratio many users slowed to less than dial-up speeds. After high profile complaints and reports Telecom announced the refund you hear about. This is not something i would have expected from the 'old' telecom and is an encouraging sign. However due to their history i strongly believe that if they did not make this move voluntarily then they would have been forced into something similar by the NZ commerce commision. This is, i believe, telecom making the best of a bad PR situation. For a good example of telecoms attitude to its customers and their feelings in return see http://www.youtube.com/watch?v=AGrKLNnGfZY Finally telecoms excuse for the problem was that traffic shaping bandwidth control that was supposed to be applied to P2P or similar loads was accidentally missaplied to all traffic. This will be proven i guess when they correct that mistake and we will see if users do get full speed.