A few weeks ago I spent a day with Telefonica Digital as it showed off its latest online services. Created just 18 months ago, the Digital unit of the Spanish-based operator giant has been tasked with developing services in areas such as multimedia, M2M, eHealth, and cloud computing. And early progress has been impressive, with the unit forecast to be a EUR5 billion-a-year revenue business by 2015.

Telefonica Digital summed up its mission as going ‘Beyond Connectivity,’ a tagline that will have taken on a certain piquancy following the major network outage at the parent operator’s O2 UK arm last week. Telefonica may be a progressive operator in terms of digital services, but it has just learnt a harsh lesson that its core business remains very much about connectivity.

O2 UK’s network problems kicked in last Wednesday afternoon and it took the best part of 24 hours for normal service to be resumed. While O2 has been tight-lipped on the exact cause, the problems are thought to relate to the Home Location Register (HLR) used to log users onto the network – or possibly a similar system outsourced to its network supplier.

Whoever was to blame for the network gremlins, the result was to leave a seemingly random selection of subscribers unable to make calls or access data services. It’s not clear how many of O2 UK’s 23 million customers were affected, but the public outcry suggests it was a sizable proportion. The issue sparked a potential PR disaster for O2 as disgruntled customers vented their anger via any means possible. O2’s social media team did an admirable job in diffusing much of the vitriol that came its way via Twitter, but it’s too early to say if O2 will avoid any serious long-term reputational damage. It may conclude that offering compensation to affected customers may be the only way to put the issue to bed – something RIM was forced to do following the embarrassing collapse of its BlackBerry network last year

Customers don’t expect mobile networks to go down, which explains much of the shock and anger when they do. Indeed, the incredulous reaction to the O2 glitch reflects the fact that networks are generally extremely robust and outages extremely rare. But it does happen; and to some of the world’s largest and most advanced mobile networks. Japan’s NTT Docomo suffered five outages in eight months recently, which led to senior management agreeing to 20 percent pay-cuts in order to syphon funds off into network improvements. Verizon Wireless has had some embarrassing teething problems with its state-of-the art LTE network in the US, while Orange suffered a 10-hour outage in France just a few days prior to the O2 failure.

The media attention garnered by these outages shows just how critical mobile networks have become to our daily lives. As people continue to ‘cut the cord’ with their fixed-lines, mobile is now the sole source of connectivity for many; some may even use a mobile as their only connection to the Internet.

And that’s just individual consumers. What of the enterprises and public services that increasingly rely on mobile connectivity?  One worrying report to emerge from O2’s outage was the impact it had on the London’s cycle-hire scheme (the so-called ‘Boris bikes’). As O2’s network was used to process payments via the terminals, almost one in five of the capital's bike terminals were put out of commission during the outage.

The previous Friday (6 July), O2 UK announced a deal with G4S to supply up to 1.4 million SIMs for smart metering services in what was described as one of the largest-ever M2M deals in the UK market to date. Within a few days, O2 was firefighting the network outrage, while G4S was making headlines for failing to deliver on an Olympics staffing contract, forcing the drafting in of the army to keep the peace at the upcoming games.

The M2M deal was largely forgotten in the subsequent furore, but its timing in relation to the network outage offers up a pertinent point. As operators increasingly connect ‘things’ as well as well as people to their networks – be they bike terminals or utility meters or even criminals – the robustness of the underlying network will become ever more critical.

Matt Ablott

The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members