What do you do when you build a multi-million dollar, state of the art HSPA mobile network from scratch and it keeps falling over? It’s no use asking Telecom New Zealand CEO, Paul Reynolds, because he doesn’t know either!

His lauded 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 happens he apologies profusely and has offered disgruntled customers compensation twice but it’s all becoming a little too serious even for that.

The 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 this afternoon announced a range of significant measures aimed at restoring customers’ faith in XT. He also announced significant changes to the way in which the XT network will be managed, as a result of the unacceptable level of service.

“For too many of our customers, we have not lived up to the promises we made about XT when the network was launched,” Reynolds said. “So that’s why we are taking action on a broad range of fronts, covering the operation and management of the network, and customer offers.”

Heads have started rolling and fingers are starting to be pointed. Telecom’s CTO, Frank Mount, has suddenly resigned. His resignation was accepted by Reynolds this morning and is effective immediately.

Alcatel-Lucent, the builders and outsourcing managers of the XT network have announced that Steve Lowe, CEO New Zealand & Pacific Islands at Alcatel-Lucent, has decided to leave the company. A statement issued by the company yesterday gave no reason for Lowe’s departure, which was announced as Alcatel-Lucent’s Asia Pacific president Rajeev Singh-Molares was en route to the country. That could explain Mr Singh-Molares’ reticence to discuss outsourcing during an interview I taped with him last week in Barcelona. He’s only just taken the role and facing quite a baptism of fire. Even Alcatel Lucent CEO, Ben Verwaayen, has committed to providing the full global resources of his company to get the issues fixed.

Ernie Newman, of TUANZ (Telecom Users Association of NZ) said this morning they don’t appear to know what the problem is. TUANZ is describing the matter as ‘incredibly embarrassing’ and will, no doubt, be lobbying on behalf of it’s members for more compensation.

But even with all the hooha no-one seems to know why the problems persist, yet there are no shortage of theories coming out. One which is circulating locally, and is most concerning, is that disgruntled staff could be involved. All remaining TNZ engineers were terminated as employees and put on contract in early January. The staff picketed for weeks – so the grudge angle might have legs.

Commentators are putting it down to a fundamental design problems. Others are honing in at board level, claiming the current situation has arisen from the era of Government ownership, especially the selection of CDMA over GSM in the late 80’s, contrary to most leading world markets. That decision cost TNZ dearly as its major competitor, Vodafone, cleaned up the local market with its GSM offering and the bulk of roaming revenues as New Zealand is none of the world’s leading tourist destinations.

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. Whatever happens, you can bet there will be more drama to come. There will be lots of ‘I told you so-s’ being uttered around TNZ’s decision to outsource its network and this could be a major setback for all parties concerned. The respective PR machines will have their work cut out for them, thats for sure.

Perhaps the most poignant view comes from a friend in New Zealand that wrote to tell me about his fifteen year old daughter. “I hadn’t realised how much some people rely on the cellphone. My daughter worked through her school holidays and in January and invested her earnings in the latest Ericsson NT handset and prepaid credits. The phone is used to structure her entire life – especially social life, Facebook, etc – which all doesn’t happen when the network is down. Man she is gutted.”

Can you imagine how you would feel if your network suddenly stopped working?