Author(s): Kester Mann
O2's well-publicized network meltdown last week dealt an obvious blow to its cherished brand, but it remains to be seen if the operator will suffer any long-lasting damage.
It's easy to overdramatize this sort of incident, which can have a very short-term impact on a large number of people. Mobile technology is immensely complex and occasional hiccups do happen. However, assuming that it doesn't repeat itself in the near future, the outage ought to be confined to the archives relatively quickly. Mobile subscribers are actually a surprisingly tolerant and forgiving group of consumers.
Still, although most operators suffer network glitches from time to time, few last as long or impact so many as the near-24 hour failure did for O2. The timing — during the busy Christmas season — was particularly unfortunate. Indeed, such was the severity that it became headline news in UK national media, even usurping Brexit for a short period of time — quite some achievement!
However, O2 appeared to deal with the incident promptly and openly, posting regular updates on social media. It should also take credit for issuing a joint "mea culpa" with network provider Ericsson, at whose door most of the blame appears to lie.
O2 also quickly announced that it would offer compensation or credit to contract, pay-as-you-go and mobile broadband customers, a decision that should go a long way to appeasing many of those affected. Customer retention is crucial in a mature market like mobile, so this is a logical move and one that will help preserve the good reputation O2 has long enjoyed in service and customer care. O2 customers are among the most loyal on the market and I believe that, barring a repeat occurrence, they're unlikely to begin searching for an alternative service provider simply because of it.
Our recent research shows that UK consumers are typically highly loyal to their network provider; nearly half of respondents to our recent survey said they have a preference for a particular operator. Further, almost one in four (23 percent) told us they've never changed their mobile operator and a further 19 percent only last switched more than five years ago (see Cracking the Code).
It's hard not feel some sympathy for O2 given that the reason for the failure was faulty software on behalf of Ericsson. In fact, I expect the Swedish company to suffer the greatest impact in the long run, as the problem extended to markets beyond the UK, mainly Asia, according to reports. The company is bound to receive a meaty bill from O2, but potential damage to its reputation would be even more costly. With Huawei on the back foot thanks to concern within some governments about security, a window of opportunity had opened for the embattled kit-maker to make up for years of lost ground. Executives in Stockholm will be kicking themselves.
One should also spare a thought for O2's partner providers, which serve a combined 7 million customers in the UK. These include Tesco Mobile and Sky, which were similarly affected and so also had to pacify disgruntled customers even though these operators weren't directly responsible. I'm sure they'll be seeking some form of recompense from O2.
For me, one of the interesting aspects about the outage was that it didn't just have an impact on mobile phone users. Signs at bus stops displaying information were also affected — Transport for London is one of O2's enterprise customers. This got me thinking about the importance of network reliability in a future 5G era; if, for example, connected buses were affected as well, the ramifications would be far greater.
That's for the future though. For now, O2's focus should be on ensuring its customers stay loyal and moving rapidly to put this incident behind. Encouragingly, most of the signs suggest that it has already taken important steps to get back on track.