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7536 COMM Reputation Management: Assignment 1

Department of Communication Studies

Assessment and Assignment Cover Sheet

Student Name NAOMI STRICKLAND

Student ID . 1291405

Assignment title Essay Assignment 1

Programme, Course no./ title

COMM 7536

Lecturer/Tutor Ed Mason

Date submitted 01/04/2010

Date received (office use only)KEEP A COPY Please be sure to keep a copy of your work. If you have submitted assignment work electronically make sure you keep a backup copy.

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I declare that all material submitted in this assignment is my own work except where there is clear acknowledgement and reference to the work of others. I have read Unitec's information for students on plagiarism and academic misconduct at http://uniweb/quad and in Unitec's Student Handbook.

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Signed Date 29/03/10

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Name: Naomi Strickland 1291405 Date: 1/04/2010

Criteria Possible Mark

Content and Analysis

A theoretical perspective on the nature of information and the role of the mass media

Evidence of reading and factual knowledge related to topic A thoughtful analysis of the material in terms of the theory

(30)

Logical Development

Each segment well structured (15)

Relevance and Synthesis of material

Inclusion of relevant material, thoughtfully and critically analysed, with clearly justified conclusions.

Defining the dimensions of the topic, quality of ideas and Expression (40)

Presentation

Format Style and expression References (15)

Mark Awarded (100)

Comments

Good points of your assignment are:

Your assignment could be improved by:

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COMM 7536 Assignment One – Worth 30%

Marking Schedule

COMM 7536 Reputation Management Assignment 1

By Naomi Strickland 1291405

This essay will describe and evaluate the perspectives of both Telecom’s failed XT

Network and the role of the mass media in surrounding this case. Furthermore, related

theories will be discussed in highlighting viewpoints that psychological and social factors

have in influencing public opinion by drawing attention to the implications that have evolved

as a result. The following information from Telecom NZ, NZ Herald, Dominion Post, and

Radio Live interview with former CEO Teresa Gattung, YouTube and class lectures were

used to form the basis of this assignment.

New Zealanders by and large are usually forgiving people. They may be nit-pickers of

procedure at the best of times, but generally speaking they do believe in giving people a

chance to make right of a bad situation. When Telecom’s XT Mobile Network was promoted

as being world class with the best global roaming services available, as well as having the

best 3G coverage in New Zealand, one was almost tempted to upgrade. Later when it was

discovered that this super-fast mobile broadband accessibility was nothing more than an

unreliable penny-pinching offer that came with its own set of ongoing problems, irate

customers and government alike were demanding answers from Telecom.

(Telecom, 2010)Between December 2009 and February 2010 Telecom's XT network

experienced a series of disruptions that Telecom had apologised profusely and assured its

customers to solve these outages immediately by

o upgrading the technology that powers this network

o improving coverage area for stronger signal strengths to prevent instances of dropped

calls as experienced by a group of its customers

o improving on capacity for usage especially in high density areas such as cities

o increase resilience by increasing the number of Radio Network Controllers (RNCs)

for processing power to lessen regional impact at a lower level in future

o and also offering major compensation packages to those affected

What has occurred instead has been a number of disappointing episodes resulting in top

Telecom executives resigning with numerous press conferences by Telecom CEO, Paul

Reynolds in attempting to make good of a bad situation.

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Timeline of events began on:

o 14 December 2009. The outage was believed to have been caused by a corruption of

software during a routine operational process in which it impacted XT users on the

southern RNC for several hours.

o Following on from there on Wednesday 27 January through to Friday 29 January, a

hardware failure in a router caused outage. Up to 58 cellsites were out of service until

the Friday evening, 29 January, at 10pm.

o Leading on from there on the 17 February 2010 an issue with the southern cell sites to

the new RNC in Taranaki and the Hutt Valley affected 16 cell sites due to a process

failure within the migration process.

o On Monday 22 February 2010, the southern RNC experienced a severe reduction in

voice traffic (calls). Up to 81 of the 450 cell sites served by the RNC lost all services

with customers experiencing severely degraded voice calling service and patchy SMS

and data. All sites were restored following a RNC restart which took the Christchurch

RNC out for about 20 minutes (Telecom,2010).

The challenge for Telecom NZ was dealt with in two ways. Firstly in getting answers from its

French contractor Alcatel-Lucent who built its $574 million XT network. Secondly, Telecom

was to improve its services and reputation to the New Zealand public and to the government.

This was to ensure that the government was given all opportunity in being part of the process

in helping where possible in order to prevent the country’s main telecommunication company

being regulated as a result of continued and ongoing outages.

The impressions and images that people have about the world are largely due to the way

that the media have portrayed and influenced our way of thinking. (Slideshare, 2010) The

media:

o Help direct us to find space for public opinion by instilling the view that ‘Global

Public Opinion is the new Super Power’

o Define what is normal

o Entertain

o Transmit Values

o Service the Economic System

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o Service the Political System

o Set the Agenda

o Inform and interpret

From the moment we wake up until the time we go to sleep, we are constantly bombarded by

the influences of media, whether we consciously realise it or not e.g. Listening to car radio

news, reading the newspaper, bogged down with billboards being advertised on our way to

and back from work/school, topic of discussion with peers and associates, lives influenced by

government policies that are relayed to us via media and the list goes on. According to

McComb, these include “what those pictures are about and what those pictures are.

These...have significant implications beyond the pictures created in people’s heads”

(McComb & Shaw, 1972). These pictures are further reconfirmed by the example of

Bindoff’s Brick Wall Theory (2010) “those people who have an opinion have an opinion

based on a compound image built up out of hundreds if not thousands, of inputs over years”

A good example of this with Telecom’s XT network failure and the image that people have,

are predominantly fuelled by existing prejudices from Telecom’s former CEO, Teresa

Gattung being highly paid at 3 million per annum several years ago. With this image of

intolerance already formed, plus the existing knowledge of Telecom’s present CEO’s pay

package at 7 million, given the present fiasco as well as the company’s plummeting shares to

name a few negative truths, the public’s knowledge of Telecom so far has not helped the

company in any way. All these have not only given Telecom a bad name but have

exponentially exasperated the situation to a deplorable state of affairs.

In many ways it can be said that mainstream media had literally set the agenda right from the

beginning under the guise of being informative to its public. As time has revealed, even with

Telecom’s best and greatest efforts in remedying this problem, will never manage to cut it as

far as people’s views are concerned. The reason being that the “compound image built ... over

years” (Bidoff, 2010) is unfortunately set in concrete for it to shift to a new dimension.

Given the dynamics of Telecom’s dilemma with its failed XT network and the

inconsistency of delivery to its customers, one would be hard pressed to visibly see anything

on their website in making it easy for the public to acquire such information. It would appear

that it is business as usual for Telecom and rightfully so, given that its shares are at an all

time low. Never the less it wouldn’t go a miss if somewhere on their first page of their

website was a focus on accessibility to the company’s vision, mission and connectedness to

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its stakeholders. Even more so, in showing visible effort was being made to remedy the

present crisis e.g. by showing footage of Telecom’s CEO apologising. Instead, one has to

manoeuvre and rummage through the clutter of sales pitch and offers to second guess where

the XT Network Update is.

Although Telecom prides itself in stacking up to international standards in its performance in

the area of ‘Corporate Social Responsibility’ which is (Telecom, 2010) acknowledged by

their inclusion, since 2004, on the FTSE4 Good Member Index, as one of many list of

companies that meet internationally in defining corporate responsibility criterias. This well

prized recognition should be at the forefront of the company’s website in helping to give it

credibility whilst attempting to defend and rebuild its reputation under present circumstances.

In all footage presented by media about Telecom and the company’s Chief Executive, Paul

Reynolds, one is left wondering whether the media has softened its touch on Telecom and its

debacle. Although Paul Reynolds has tried to make all efforts in solving this nightmare of a

situation, he and all of Telecom’s executives, when filmed on television, are always seen with

loosened ties or sometimes none at all, and are very sincere in trying to make all attempts in

keeping in touch by communicating with the public. The audience is almost beguiled in to

thinking that they’ve been physically working hard to solve this problem.

If we are to compare all efforts according to the structures of a typical PR reputation

management rescue plan, it would be fair to say that yes Telecom has done all the right things

in order to restore a good reputation for itself. An example of this is when we see Telecom

CEO, Paul Reynolds saying “sorry and I'm determined to get this fixed. I feel like as CEO I'm

here ... to lead this organisation through those tough times"(Dominion Post, 2010).

Telecom has always been proactive in being:

o Visible and honest in owning up to the problem and apologising

o Visible in keeping in touch via the media

o Always showed remorse and concern

o When asked, never rejects or dismisses negative questions by media

o Was honest and sincere in assuring fix time even when unknown

o Has given a generous compensation offer as a starter to relay Telecom’s genuine

concern for its customers

o Has shown respect for all involved

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“Would I do business with this man? Yes I would. Why? Because he treats me with respect”

(Bindoff, 2010). Telecom has followed Bindoff’s rebuilding crisis plan because they have –

dealt with the situation honestly, in which three things were achieved;

o told parts of their story that the media may not otherwise have been interested in

o Built Telecom’s own reputation – as the interface with the media and the public which

is utterly vital to developing a corporate reputation.

o And built its own corporate reputation.

“And how do you build that trust: be available, be honest, fess up, and say what you intend

to do and then do it – and if it isn’t working out be the first to say why” (Bindoff, 2010, p.16).

Agenda setting theory says that, “Television (and more broadly the media) may not tell us

what to think but they do tell us what to think about...Mass media have the ability to transfer

the salience of items on their news agendas to the public agenda” (McCombs & Shaw, 1972).

Often the public will rely on news professionals to select for them what is newsworthy

enough to be classified as important news for its audience. According to McCombs and

Shaw, the power of the press/media sets the agenda for public discussion and is seen as a

form of political power that’s unrestrained by any law. In other words, media agenda will

determine what people talk about and think about. Management of these news strategies and

values will inevitably determine via the news editor in how it best fits its intentions from how

the agenda is set.

If we tie this in with the ‘Slide show, 2010’ as mentioned earlier, the assumption of the media

would fall under several categories. The Telecom crisis would serve as helping us to find

space for public opinion, transmit values in relaying to us how Telecom has handled the

crisis, service the economic system by deciding whether our largest telecommunication

company, Telecom should be regulated to get more out of it for your average New Zealander,

inform and interpret what the government is planning to assist in helping with that process

via its political system and finally as an advocacy role in Community Forum. Is Telecom

deemed to be doing the right thing by its investors and the wider communities of N.Z.?

Media framing can be seen as having a central organisation of ideas relayed through a

storyline that gives meaning to events that are about to unfold: the frame suggests what the

controversy is about and the essence of the issue (Gamson & Modigliani 1987 cited

Scheufele 2000). The concept of media framing is related to agenda setting, but is different in

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that it focuses on the core of the issue as opposed to the particular topic at hand. The media

does this by focussing the attention on certain events and then it places them within a field of

meaning. By drawing public attention to certain topics in what it wants the public to think

about, and by the way the news is presented, through to how it’s packaged is all part of

framing.

"Television news producers and newspaper and magazine photo editors make decisions every

day which firm up the wavering consensus about the boundaries of public knowledge"

(Sontag, 2003, p. 61). Therefore a media frame refers to the way media and its entourage of

organisers present the events and issues they cover, and the way audiences interpret what

they are provided with in following through with the deception. This form of social

engineering invariably influences audience perception by telling people what to and how to

think.

According to Bill Ralston, journalist and broadcaster on Radio Live, “I want conflict, not just

balance, I want to personalise or humanise the story, not just report the fact. I want an angle

that is different from what other media have got” (Mersham et al, 2009, p.139). If we are to

take the example of Teresa Gattung’s interview on Radio Live with Andrew Patterson, we

could almost be persuaded in to blaming the government for Telecom’s crisis. This not only

takes the focus and heat off Telecom, even if it’s only just for a moment, but outlines the

predictions that Ms Gattung talks about during her time as highlighted in yellow in Appendix

1. E.g. “you suggest in the book that the problems Telecom are experiencing ... a direct

result ... the actions the Government took in 2006... the collective madness was believing

that this would be broadband nirvana ... I warned, at the time, ...a train wreck, down the track,

if they preceded ... share prices now at 2.20 and a 20% drop of profit one in one outages and

multi-day mobile outages. If you don’t think that’s a train wreck, what is?”

The dumbing down effects of the media in taking the focus off Telecom and shifting it on the

government of the time when Ms Gattung was CEO is prevalent in the interview. The classic

highlight though is when Ms Gattung points out, “I’m surprised that there hasn’t been more

commentary in the NZ media about what’s going on with Telstra Australia, or in Australia

media about what’s going on in Telecom NZ. You’ve got media organisations owning media

publications, but it’s like you have two different tunnels and two different silos, but it’s the

same dynamics” (Gattung, 2010). Although this is unintentional on Ms Gattung’s part, but

does this suggest that there is room for more scrutiny directed at the media and not Telecom?

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The factors influencing New Zealand public opinion in general are a culmination of

features that border on pressures imposed on us from direct global trends in the world. A

good example of this practice is multinationals accessing our shores via business deals such

as Alcatel-Lucent and Telecom. It is to be anticipated that these contacts are inevitable but is

it possible to put a filter on how they conduct their business from past developments that they

themselves have already been involved with in other parts of the world? Although more often

than not it’s difficult to control these impositions and practices introduced. Through stricter

and stringent Government management and requirements will surely protect us from such

questionable practices of what would almost be deemed as exploitive business practices as

witnessed with “Alcatel-Lucent’s deferred prosecution in the United States over charges of

violating the Foreign Corrupt Practices Act’s anti-bribery provisions”( Reuters,2010). If

industrialisation was transported to different parts of the world by colonisation many years

ago, and with it, came about prosperity for many. There were also many negative and

damaging outcomes from colonisation. What’s to say that we are not re-living the experience

all over again? Only this time its intangible and not as easily recognised as being anything

else but good economic development in producing good job opportunities and prospects for

New Zealanders as a whole. Public opinion will continue to be divided as the country’s

economy take one step forward and two back each time there’s a newly elected government.

As a result the psychological and social impact on public opinion will result in a lack of

confidence in the government to ensure that business partnerships such as Telecom,

NZ/Alcatel-Lucent will bring a sense of economic stability and prosperous future. The reason

why it will not happen is because our government is not in a position to secure ownership on

anything. If we are already seeing the signs of the times with profits being channelled out of

the country with foreign ownership already widespread in this country, there certainly will be

more of this to come. (Radio Live, 2010)As Teresa Gattung reiterated in her interview, that

all this really depends on the government to do a deal with Telecom in securing the potential

to shift to a different business model in order for it to protect its future and our future.

Likewise in anything that government establishes, it must ensure through its regulatory

authorities (as also mentioned by Ms Gattung) that we are not caught off guard in easily

falling prey to being disadvantaged and vulnerable to incompetency from our own

underdeveloped and lack of savviness in business and the government’s fiduciary duties in

protecting the country and its wares. The public are no fools, if government has not heard

them and their opinions, then it would be to their own detriment and demise to ignore the

masses ... especially when elections roll around every three years.

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Word Count 2938 References

McCombs, M., Shaw, D. 1972. The Agenda-Setting Function of Mass Media,

Public Opinion Quarterly, 36, 1972, 176-187. University of Texas: Austin

Scheufele D.G. (2000). Agenda Setting, Priming and Framing Revisited: Another Look at

Cognitive Effects of Political Communication. Mass Communication & Society, 2, 3.

Overview of Agenda Setting Research in Journal of Communication, (1993). Symposium:

agenda setting revisited. 43(2), 58-127.

Mersham, G., Theunissen, P., Peart, J. 2009. Public Relations and Communication

Management: An Aotearoa/New Zealand Perspective. Auckland :Pearson

Sontag, S. (2003). Regarding the Pain of Others. New York: Penguin.

The Dominion Post: Broadband Threat to Telecom. Wednesday, 24 February, 2010.Retrieved

20/03/2010.http://olive.dominionpost.com/

NZ Herald: Apology Video & Telecom Offers Compensation after XT Network Failure

. Retrieved 22/03/2010

http://www.nzherald.co.nz/nz/news/video.cfm?

c_id=1&gal_objectid=10627972&gallery_id=109504

http://202.175.135.93/nz/news/article.cfm?c_id=1&objectid=10628010

Reuters: CORRECTED - Alcatel-Lucent signs deal with US on bribery case. Retrieved .24/03/2010

http://www.reuters.com/article/idUSLDE61I1GK20100219

The Medias Job. Retrieved 26/03/2010

http://www.slideshare.net/eltiki/functions-of-mass-media-presentation#

http://www.youtube.com/watch?v=qQVtXFJstnc

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Appendices 1.

Radio Live Interview by Andrew Patterson with former Telecom CEO, Teresa Gattung

5th March, 2010

Andrew: Good afternoon. This is the World at Noon, I’m Andrew Patterson. Former

Telecom chief, Theresa Gattung, has written a tell-all book, ‘Bird on a Wire’ telling of

her life and times of (what was then) NZ’s largest-listed company. In it, she describes

the Labour Government’s 2006 decision to separate the company as collective madness

and, as you’ll hear, remains insistent that Telecom was already heading down the path

of reorganisation, to create a more-level playing field. In the book, Miss Gattung takes

a swipe at the current Telecom management, suggesting they’re overpaid and the

organisation has a cost structure that’s out-of-proportion with its declining revenues.

So, why write a book in the first place ... a question I earlier put to Theresa Gattung.

Teresa: Well, I’ve always been a book lover. I’ve always loved reading books ... I love

books. I’ve always loved hanging around books ... voracious reader ... journalist, when I was

younger ... approached by a couple of publishers, while I was still at Telecom. It wasn’t the

right time then, and it wasn’t the right time a couple of years afterwards ... feels like the right

time ... in the right perspective, in the right head space ... enjoyed the process.

Andrew: You suggest in the book that the problems Telecom are experiencing right now

are a direct result of what the actions the Government took in 2006, to separate the

organisation, which you said was collective madness? And yet, wasn’t it a case that

Telecom had to literally create a more-level playing field?

Teresa: Actually, Telecom had already offered to do that. We were putting in place a

wholesale voluntary charter, which was just to do that. So I don’t think ... it was presented

that this was the only answer ... the collective madness was believing that this would be

broadband nirvana, complex questions around the economics of broadband, regulations of

telecommunications. And yet I do think, as we warned at the time, it wasn’t just me that the

government presented with that model operation of separation, and there were other

alternatives that we ourselves put up an alternative model to the Select Committee that wasn’t

as evasive as that. It didn’t have as much requirements, in which it would screw the company

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up, and force it to be a very long time. I warned, at the time, that it was going to be a train

wreck, down the track, if they preceded with that. And I guess all I’m really saying is that the

share prices at 2.20 and a 20% drop of profit one in one outages and multi-day mobile

outages. If you don’t think that’s a train wreck, what is? So I think its just that its turned up

now that’s all

But would it be fair to say, that the relationship between Telecom and the Government

(at that point) had become dysfunctional, and wasn’t it unfortunate that it had literally

got to that point?

Well, it wasn’t like that. That’s why I laid it out in the book, why I haven’t been back in the

last two years because I wanted to lay it all out in context. I mean, what happened wasn’t a

culmination of a bad relationship with the Government ... they got elected in ’99, and this is

2006 ... that six years is actually marked by a constructive, good relationship. We

renegotiated the Kiwi Share together. We voluntarily reduced mobile termination rates,

which complimented me and the team on. We voluntarily did a deal with BCL, to get

broadband reach out past 90% mark to rural areas. We’ve worked with the Ministry of

Education, to get broadband and video-conferencing to schools ... so we didn’t have a bad

relationship with them. That’s how it was portrayed at the time, and later that’s not how it

felt going through ... we actually had a good relationship going through with them.

If you had a good relationship with them, you wouldn’t have then be struck with, what

you described as, a bombshell, when it was dropped on you what they were going to do.

Well, that’s what I talk about in the book. People are free to read it and make up their own

minds. I do lay that out, what happened and when quite clearly.

Didn’t Telecom miss a strategic opportunity, to see the future in the mid to late 90, to

position NZ at the forefront of telecommunications technology, instead it turned the

organisation into a cash cow. It was mailing out fat dividend cheques, and it was

leaving its telecommunication technology and infrastructure to run down.

Well, that’s the urban myth. But you know, I’m sitting down in Wellington, where the trains

don’t work every second day. And we’ve just had a 1-1-1 breakdown two weeks ago and

mobile breakdown and multi-outages. How can anyone seriously level the allegations at us

that we underestimate the level of infrastructure? It’s just not credible, when what we see

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around us now. That’s under-utilising infrastructure. What’s happened with Rail? We did

not under-invest in infrastructure; that is an urban myth!

Couldn’t Telecom/we/you been visionary as the CEO of Telecom, to really see the

future?

I agree with you, that it’s hard to believe the bad situation that we’re in was the only

outcome. There must have collectively been a better outcome. That’s what you would think.

But when you go right back, we had seen the future. We had been really early, to set up Xtra,

and entered into that service provider. We had really been early with focussing on the

Internet. We had been early to get into Broadband. I think we focused too long in getting

Broadband out, in terms of reach, instead of getting speeds up in urban areas, where in fact

the economics didn’t support that. But a government’s come along now and said that we’ll

spend $1.5 billion on broadband. You’re always talking about spend of that magnitude, in

terms of actually fibre. And it was totally unrealistic, to think that one company was actually

going to do that. The fundamental disconnect here is that, if you ask Kiwis how your main

telecommunications company to be, to have a CEO who has a legal obligation to

shareholders, in terms of return or to be a SOE (State-owned Enterprise), which actually has a

public service objective as well ... the answer would be that they would want it to be an SOE.

Upon that, fundamental disconnect, which was exacerbated by the way Telecom was

privatised ...that very few Kiwis, in fact, owned a stake in it ...it’s owned by institutional

investors. So again, there was a disconnect. Nothing’s inevitable; there’s a chain of events

that, when you look back at it, some things were unintended consequences of other decisions

that were made.

You’ve been critical of salaries being paid to Telecom executives, including CEO Paul

Reynolds. Does that suggest that you were underpaid in your role?

Hahaha! Well, I make a moderate one-sentence about that, in a book of 80,000 words. I

expect that’s where the media has gone this morning. But I don’t expect that one sentence in

a book of 80,000 words constitutes an attack. And I’m really making a point that the model

doesn’t really work too well, if profits are halved and salaries are going up, that obviously

I’m a private sector person. You know, that the model doesn’t work too well, if you’ve got

those dynamics going on.

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So, if you were CEO at Telecom, would you be cutting salaries?

Well, that’s for the Board to decide. I make the comment in the book that the model doesn’t

work, if profits are going down and salaries are going up. That’s self-evident. I don’t think

that’s very controversial.

Just on that point, the Telecom Share Price has hit an all-time low of $2.18 this week;

could you see Telstra making a bid for Telecom?

I think there would be a problem with the Regulatory Authorities ... in terms of competition.

Also, if you look across the ditch, you’ll see the same dance and speed animation, that went

on in NZ, and is still going on with the Government and Telecom, is still going on with

Telstra and the Australian Government. It’s playing out in front of our very eyes. In fact,

I’m not surprised about anything because I’ve spent a bit of time in Australia. I’m surprised

that there hasn’t been more commentary in the NZ media about what’s going on with Telstra

Australia, or in Australia media about what’s going on in Telecom NZ. You’ve got media

organisations owning media publications, but it’s like you have two different tunnels and two

different silos, but it’s the same dynamics.

Just on a personal note, you wrote in the book that you’ve lost a relationship because of

the pressures that the job brought upon you. Were there times when you just wanted to

chuck it all in?

No never. I’m very focused! By the end of it, it was very obvious that it was the right time.

I couldn’t be in a situation where I’d be in the dictates of a Minister, and so it was time to go.

But prior to that, I never thought about chucking it in.

Yes I’m honest about the cost of doing those sorts of jobs that puts a lot of pressure on

relationships. I do want to say that it’s possible, if I had been more talented at horse-riding,

and chosen a career as a horse-rider, I would have been obsessive and had the same result.

You know, you can’t say that it’s all black and white. But definitely, it’s been a huge

contributor.

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You say that you were under a greater level of scrutiny because you were a woman.

Isn’t that an issue which we’ve moved on as a country, and as a CEO and you do it to

the best of your ability, irrespective of your gender?

Well, I finished the book in December, and at that point (two and a half years in), Paul

Reynolds has had a lot less scrutiny than me. But obviously, that has changed with a lot of

the outages in January. But right now, it wouldn’t make a fig of difference, whether you

were a male or female, if you were having this scale and magnitude of network outages,

although I do think you’d be under a lot of scrutiny. But if it was me or any other woman,

there would have been more serious call for heads to roll. I’m not saying that there should be

... I’m merely pointing out that woman have a finer line to manage, in terms of what’s called

appropriate leadership. So no, I do think that female CEOs are still under more scrutiny.

But as of today, beginning of March, I don’t think he’s under any less scrutiny, than a woman

would be because of what’s happened.

Finally, what is the future for Telecom and telecoms worldwide? Why they’re all

dealing with the same problem, how they’re dealing with a declining business model. Is

it inevitable what the future’s going to be?

No, it’s not inevitable. It really depends on the Government. If the Government really does

go ahead with 33 different regional providers for their Broadband model, and Telecom end

up in competition with them, obviously they’re going to have a Telecom future with them,

then that’s going to be bad for the whole country. If the Government do a deal with Telecom,

then Telecom has the potential to shift to a different business model. It’s never going to be

what it was. There’s too many global competition ... too many alternatives. So it’s never

going to make the profits that it used to make. So that’s just the reality.

So you got out at the right time?

Hahaha. No, it just might be that I got in at the right time! But I don’t know. I got in there

as a tech rep. I saw the highs and the lows. At times, it was fun, but it was pretty hard work,

from that time onward because of the global forces of the whole sector, as you well point out.

Thank you very much, that was former CEO of Telecom Teresa Gattung ... BOOK:

Bird on a Wire

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Appendix 2

CORRECTED - Alcatel-Lucent signs deal with US on bribery caseFri Feb 19, 2010 2:14pm EST

Corrects to U.S. Securities and Exchange Commission in second paragraph)STOCKS

PARIS, Feb 19 (Reuters) - Telecoms equipment gear maker Alcatel-Lucent (ALUA.PA) set aside 93 million euros ($125.5 million) last quarter to settle a U.S. authorities' bribery investigation that began six years ago.

The Franco-American group said that it had reached agreements with the U.S. Department of Justice and the Securities and Exchange Commission under which it would pay fines, be put on a three-year probationary period, and be subject to a French anti-corruption monitor.

In exchange, the Department of Justice would defer prosecution of the company over charges that it violated the Foreign Corrupt Practices Act's anti-bribery provisions.

The accord must be approved by U.S. courts in order to take effect, according to a February 11 regulatory filing from Alcatel-Lucent.

"If finalized, the agreements would relate to alleged violations of the FCPA involving several countries, including Costa Rica, Taiwan, and Kenya," said the company in the filing.

The investigation centered on an Alcatel executive Christian Sapsizian, who pleaded guilty in 2007 to arranging for bribes to be paid to Costa Rican officials to obtain mobile contracts.

Also at issue is whether employees at an Alcatel subsidiary paid bribes to influence bids for railway contracts in Taiwan.

The agreement with Alcatel is among a recent series of foreign bribery cases brought by the U.S. Justice Department under the Foreign Corrupt Practices Act.

French authorities are also investigating several allegations of corruption at Alcatel units in Kenya, Nigeria, French Polynesia, and Costa Rica. Alcatel-Lucent said it was co-operating with the French investigation.French engineer Technip (TECF.PA) earlier this month set aside 245 million euros for possible fines resulting from a Nigeria bribery case involving several companies that could lead to one of the highest ever bribery settlements. ID:nLDE61B048]On Feb. 5, BAE Systems Plc (BAES.L) of Britain, Europe's largest military contractor, said it would pay $400 million to settle allegations that it made false statements to the U.S. government about dealings in Saudi Arabia and other countries. BAE also reached a settlement with British regulators. ($1=.7410 Euro) (Reporting by Leila Abboud and Jeffrey Cane, editing by Gerald E. McCormick)

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Appendix 3.

Telecom's international call for help

Alcatel-Lucent CEO says network problems have never been seen beforeBy Tom Pullar-Strecker and Nathan Beaumont and Martin Kay and Jenny Keown

The company behind Telecom's troubled XT network is flying in dozens of its top experts from around the world in a bid to fix the beleaguered system.

The government has branded the network problems as "terribly embarrassing" and has asked for an urgent report on the fault.

Communications Minister Steven Joyce has warned he is prepared to regulate cellphone companies to ensure 111 calls are a priority when networks fail.

The latest network failure has resulted in a second scalp. Telecom's second highest-ranking executive resigned yesterday.

Telecom has offered disgruntled customers south of Taupo a $10 million compensation package. It follows a $5 million payout at the start of the month.

It also vowed to try to keep customers, saying it would talk directly to each one who wanted to jump ship to other providers.

Ben Verwaayen, global chief executive of Alcatel-Lucent, which built Telecom's XT network, said from New York yesterday that the problems in New Zealand had never been seen before.

"Apparently there are things in New Zealand that are really specific and we need to understand that better than we have done. It is our responsibility to make sure we rectify the situation as quickly as possible."

The company had used the same technology in other countries successfully, he said. A team of experts was on its way to New Zealand, but was "not the cavalry".

"I apologise to the customers of the network. They have the right to expect a flawless service — that is what they are paying for. We have let Telecom ... down on that and we are going to make sure we rectify it."

Telecom chief executive Paul Reynolds said saying "sorry" was not good enough."Actions have to speak louder than words. They're [Alcatel] on notice because it has to get fixed. This works

well in the rest of the world. We want to know why it doesn't [work] in New Zealand."As compensation XT customers south of Taupo will save 33 percent on their monthly plans for three months.

Pre-paid customers will get a 33 percent bonus when they top up. Business customers will be offered a 50 percent credit.

The latest fault exposed a glitch in 111 cellphone coverage that left some customers unable to make emergency calls, including one trying to report a serious attack.

Although Mr Joyce warned of regulating to ensure 111 calls got through, he said there was little the government could do to address continuing faults in the XT network because Telecom was a private company. But he was

seeking urgent assurances that 111 calls would be possible on the XT network if there were more failures.

Monday's fault did not affect data and text messaging.

Concern about the ability to contact emergency services was highlighted after a Christchurch man witnessing an attack on an Asian person by four skinheads on Monday could not call 111.

Reynolds said it was the only case he knew of XT customers being unable to dial 111 during the network disruption.

Cellphones usually switch automatically to other providers for 111 calls if the host network is down, but Telecom said that only happened if the network failed altogether.

The problems led to the resignation of Telecom's chief transformation officer, Frank Mount, yesterday. Alcatel's New Zealand head, Steve Lowe, resigned on Monday.

Mount led the team that helped Telecom select French contractor Alcatel to build the $574 million XT network.

But Dr Reynolds said he was determined he would not be the next victim of the failures.

"I'm determined to get this fixed. I feel like as CEO I'm here ... to lead this organisation through those tough times."

Telecom has changed its earnings forecast for the full year from the "bottom half" of a $400 million to $440 million range to the "lower end".

Its shares fell 6c, 2.5 percent, to $2.30 yesterday.

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Appendix 3.

19

Media Releases

Telecom's most recent media releases are on the In the News page. This archive contains all releases since January 1996, in reverse chronological order.

TELECOM CONTINUES XT RESTORATION WORK14 December 2009Telecom and technology partner, Alcatel-Lucent, are continuing work with specialist technical teams from around the world to restore service for XT mobile customers who have been without service since early this morning.Find   out   more...

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2PM UPDATE: TELECOM CONTINUES XT RESTORATION WORK 14 December 2009Telecom and technology partner, Alcatel-Lucent, are continuing work with specialist technical teams from around the world to restore service for XT mobile customers who have been without service since early this morning.Find   out   more...

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TELECOM RECOMMENDS XT CUSTOMERS USE LANDLINES FOR EMERGENCY CALLS14 December 2009Telecom is still experiencing service issues with its XT mobile network, for customers south of Taupo.Find   out   more...

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TELECOM RESTORING XT SERVICES SOUTH OF TAUPO14 December 2009Telecom is working to restore service for XT mobile customers who have been without service since early this morning.Find   out   more...

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NZ’S BIGGEST-EVER MOBILE BROADBAND GIVEAWAY STARTS TOMORROW9 December 2009All Telecom Broadband customers (homes and businesses) are being offered a free prepaid Mobile Broadband T-Stick from December 10th, 2009.Find   out   more...

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‘GO LARGE’ PROSECUTION7 December 2009Telecom pleaded guilty today to 15 representative charges and 2 specific charges of breaching section 11 of the Fair Trading Act 1986 in relation to its advertising of its Go Large broadband plan and ‘unleashed’ broadband plans in late 2006.Find   out   more...

Appendix 4.

The Dominion Post Broadband 'threat to Telecom'

0 Comments | Dominion Post; Wellington, New Zealand, Mar 1, 2010 | by WEIR James

RECENT XT mobile phone outages will hurt XT's brand value and "de- rail" Telecom's mobile phone growth aspirations, according to credit rating agency Fitch.

The Government's planned ultrafast broadband plan also "poses a significant threat" to Telecom, Fitch says, because the plan could exclude the phone company from taking part.

In a note affirming Telecom's A long-term rating reflecting its strong domestic

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