RIM mulls compensation after BlackBerry woes

Research in Motion may face claims from network operators following outages
RIM mulls compensation after BlackBerry woes
We are letting you down, RIM said in an apology to BlackBerry users
By Bloomberg
Fri 14 Oct 2011 09:35 AM

Research in Motion may face compensation claims as well as reputational damage as network operators refund clients for four days of disruption across the global BlackBerry network.

Vodafone Group, the world’s largest mobile-phone operator, is reviewing its options regarding compensation, spokesman Simon Gordon said.

The UAE's Etisalat and du and Qatar's Qtel said it would compensate all BlackBerry customers while Telefonica said its Spanish unit will compensate subscribers according to the hours of service lost.

Etisalat said on Wednesday that prepaid customers will receive the equivalent of three days usage, free-of-charge and credited to their account within 24 hours, while contract customers will have adjustments made to their monthly bill.

Rival telco du said individual BlackBerry subscribers on prepaid contracts would receive the equivalent of three days’ free usage, or AED4.5. Users on post-paid contracts would receive AED3.

“We definitely understand that we have to look [at the issue of compensation] as soon as we have the system back to where we need it,” Patrick Spence, RIM’s head of global sales and regional marketing, said on Thursday.

Spence said he understood that customers were frustrated and that the Waterloo, Ontario-based company needed to look at improving how it communicated the problem.

“We know we’ll have to work to do to build back that credibility,” he said.

“This has been such a high-profile outage and everyone knows it’s not the operators’ fault but RIM’s fault,” said Ben Wood, an analyst at CCS Insight in London.

“The big challenge for the operators is that it’s cost them a lot in terms of managing the problem.”

BlackBerry subscribers across most parts of the world lost data services after a network failure in the UK this week halted messaging and web browsing.

RIM Co-CEO Jim Balsillie said on Thursday service had been fully restored globally. Co-CEO Mike Lazaridis apologised, saying the company has “let many people down.”

The disruptions began in Europe, the Middle East, Africa and India early in the week and spread later to North America, RIM’s largest market.

Spence said that data backlogs may still be occurring and cause potential e-mail delays.

A London-based external spokeswoman for RIM declined to immediately comment on whether it had received compensation claims from operators.

RIM, which has built a reputation as a maker of secure and reliable e-mail devices, is struggling to stem declines in market share to touch-screen phones such as Apple Inc’s iPhone that offer more consumer applications.

The service disruptions began in areas that RIM is counting on for sales growth as revenue in North America drops.

Network operators including Vodafone have shifted the blame onto RIM as they deal with a customer backlash.

Vodafone said on Wednesday its primary focus was to ensure RIM does all it can to restore services to customers as quickly as possible.

“The network operators have been deluged with calls” and they will be “most frustrated,” CCS’s Wood added.

RIM routes its traffic through two main centers, in Waterloo for North America and in Slough, southern England, for Europe, the Middle East and Africa, said Nick Dillon, an analyst at research firm Ovum in London.

RIM said the delays were caused by a core switch failure within its infrastructure. While the system is designed to transfer to a backup switch, that didn’t happen, it said. The result was a large backlog of data.

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