O2's Payback

2:05 PM -- Almost a week after millions of its customers lost all services, some for almost 24 hours, British mobile operator O2 has outlined the compensation package it is offering customers. (See Now What, O2? and Outage Strikes O2 UK.)

And as compensation goes, it's pretty generous -- even those not affected are getting a freebie!

Even a few years ago, it would be hard to imagine this level of contrition. This is a response worthy of a social network society.

Telefónica UK Ltd. , the official name for O2, has posted the details of its compensation offer in a blog on its website and has been publicizing it on Twitter.

Basically, all of its mobile customers (more than 22 million at the end of March this year) are getting a voucher worth £10 to spend in an O2 store, of which there are 450 around the U.K.

The voucher can be used toward the cost of accessories or toward a new device. While clearly not every single customer will redeem a voucher and then spend the full amount in a store -- if you buy an accessory worth less than £10 you don't get any change -- the total value of that offer is more than £220 million, though the actual cost to O2 will only be known by the operator's accountants.

That's an offer for all customers, whether they were affected by the outage or not. The operator wanted to "thank all our customers for supporting us through an unprecedented and difficult period." That looks like a good PR move.

Customers who were affected by the outage (around 7 million in total) will get some free service. Those on a monthly contract will have 10 percent of their monthly fee refunded in September, while pre-paid customers will get a 10 percent bonus on the value of their first top-up in September.

Again, only O2 will know the final eventual cost of that compensation offer, but it will run into millions of pounds.

The operator will be texting all of the affected customers during the coming days to alert them to the compensation offer if they don't already know about it. (As one of those customers, I shall be keeping a keen eye out for mine. I'm keen to see how O2 will communicate this in a text message.)

Small-business users with fewer than 10 connections will also be contacted by text, while larger business users will be contacted directly by an account manager, who will need a good script and a ready-made list of responses.

It has taken O2 a few days to formalize its offer and develop a plan of action but the company does appear to have considered its customers and the impact the service outage had on millions of users. And it's clear the whole affair will ultimately have an impact on the operator's top and bottom line to some extent, but I'm sure that doing nothing and hoping its customers would forget the outage would have been a more costly strategy, one that would have led to higher-than-usual churn numbers, damaged the brand and fostered some lingering discontent.

The offer probably won't please everyone, and no doubt there will be some business customers who will be harder to placate and compensate (I heard one small-business user in the catering sector claim on U.K. national radio that he had lost thousands of pounds' worth of missed orders during the service disruption). But it's hard to imagine a telecom service provider offering this sort of compensation package five years ago when social networks weren't around to record customer dissatisfaction and fuel discontent.

This, I think, is a response born of the Twitter age.

— Ray Le Maistre, International Managing Editor, Light Reading

Pete Baldwin 12/5/2012 | 5:27:25 PM
re: O2's Payback

Who knew that Twitter whining would actually have a beneficial effect?

Soupafly 12/5/2012 | 5:27:07 PM
re: O2's Payback

Craig; As someone I respect, I am more than a little disappointed in you.

This story was seismic for a number of reasons, and none of them are related to your flippant twitter post.

a) Ericsson. This should have been a global PR disaster for them. Yet hats off to there media team. They have managed it incredibly well. Only a trained eye would have noticed it was their unified HLR/ customer gateway DB that crashed.

b) Network Availability; Have we reached the point where a "best efforts" network for all is no longer sufficient? Even business customers with SLA's are asking questions around that question?

c) Compensation; What rights do customers and consumers have? If mobile networks are oligopolies by definition (Why? Think; Spectrum availability & management, competitive scale, skilled HR availability, etc) then should the focus shift from price is king to availabilty/ quality is king?

Note; Vodafone has used this strategy historically in the UK, and incumbents have tried it with varying results in the EU and global markets. It worked well when you can successfully & relentlessly execute on it. I can only imagine that at some point bean-counters worked out a way to "save" on investment expenses and scam there annual bonus & the network then typically degraded over time. Now they all have no definitive USP and high costs. A poor combination.

Will the focus on CEM, SPIT & Cloud lead a return to a focus on network quality?

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