Bloomberg News

France Telecom Plans Compensation After Network Failure

July 07, 2012

France Telecom SA (FTE), the country’s largest phone company, said it would compensate customers after a 10-hour failure on its wireless network prevented subscribers from making calls and sending messages on mobile phones.

The network problems, caused by a software bug, started about 3 p.m. yesterday and disrupted calls and text messages until 12:30 a.m. today, the Paris-based company said in a statement on its website. Clients might not have had mobile access to the Internet for another three hours.

“Orange’s clients across the territory met great difficulties when trying to make calls and send messages,” said France Telecom, which markets its phone packages under the brand name Orange. “We will stay alert throughout the weekend to monitor the network.”

France Telecom plans to make up for the failure by offering subscribers free calling, texting or mobile-phone Internet surfing in September. At a press conference today, Chief Executive Officer Stephane Richard declined to say how much this would cost the company. Revenue from mobile and fixed-phone packages in France accounted for half of the company’s first- quarter sales of 10.9 billion euros ($13.4 billion).

‘Rare Event’

“We know the software stopped working on one piece of equipment, but we don’t know why,” Richard said in Paris. “It’s an isolated incident and it had nothing to do with security, capacity or the level of investment in our networks.”

The technical problem, “an extremely rare event,” is also being looked into by network equipment vendors Alcatel-Lucent SA and Ericsson AB, Richard said.

With about 38 percent of the French mobile market, France Telecom had 26.5 million customers in the country at the end of March. The company markets its phone packages at a price premium compared with French competitors. France Telecom has built its sales pitch on its extensive geographical network coverage and quality of service.

The company competes with Vivendi SA (VIV)’s SFR, Bouygues SA (EN) and Iliad SA. (ILD) Iliad, operating under the Free brand, became France’s fourth mobile-phone operator in January, prompting price cuts. France Telecom lost 615,000 wireless customers last quarter in its home market and said that a roaming agreement it signed with Iliad will help make up for lost revenue.

To contact the reporter on this story: Marie Mawad in Paris at mmawad1@bloomberg.net

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net


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