Australian telecom Telstra (News - Alert) announced recently that it will spend $2.3 billion (US) over the next three years on capital expenditures to improve network reliability. The news comes after the company has suffered a major public relations setback from repeated network outages, which appear to have led to the ouster of former Telstra COO, Kate McKenzie.
Earlier this year, Telstra experienced four mobile outages over a two-month period that have been damaging to its reputation. The company is known for charging a higher price for its services and justifies doing so because of the reliability of its network. One outage occurring in March was blamed on a card failure in a media gateway, but according to sources cited by Australian Financial Review, such outages should be easily prevented through redundancy.
Whenever service problems of this magnitude occur, someone is bound to get the axe. In July, COO Kate McKenzie announced her retirement from the company. While the official statement is that her decision to retire was voluntary, it’s hard to believe her decision was unrelated to the many outages that occurred in such a short timeframe. McKenzie’s job wasn’t the only one affected. Four hundred call center jobs were eliminated last October, followed by 300 more in July.
Even without the outages, it was likely that Telstra would have to invest in infrastructure improvements. In the past year there has been a 30 percent increase in video traffic as a result of streaming. The company’s mobile network is part of this surge in video use. Recent events in the 2016 Olympics have accounted for one-fourth of mobile traffic. The Australian Football League and National Rugby League have accounted for much of the increase. Peaks in streaming traffic generally coincide with peaks in commuter traffic.
In spite of the hit to its reputation from the outages, Telstra still dominates its market and recently announced a stock dividend. If the company is to continue in that position, it must stop at nothing to deliver reliable service and that starts with investing in infrastructure.
Edited by Maurice Nagle