Telecom threatens to drop Yahoo as email service provider

Tuesday 12th February 2013 2 Comments

Telecom has put its email service provider Yahoo! on notice after what one executive says is a service that has left Telecom running no more than "a very expensive customer complaints service."

New Zealand's largest telecommunications retailer says a "series of issues" over the past year, including this week's highly disruptive attack by hackers, had "impacted negatively" on the Yahoo! service.

BusinessDesk understands the two-month review could see Telecom cease to offer email addresses as part of its broadband packages. The company had already been considering whether what had once been a core part of its retail offering was now outmoded.

Yahoo!'s New Zealand portal is one of the underdog global internet player's more successful sites, generating substantial traffic and consequent revenue because so many of the 450,000 registered Xtra email users have Yahoo! set as their home page.

After this week's hacker problems, Telecom's retail chief executive Chris Quin said "repeatedly saying 'sorry' doesn't cut it anymore."

While Yahoo! was the right provider when Telecom contracted out its email service, Xtra, in 2007, "the global email environment has changed markedly since then."

"We believe the time is right for a comprehensive review of our approach in this area," he said.

Telecom initially blamed this week's hacker invasion of Xtra customers' databases on customer error, before "double-checking" with Yahoo! to be told there had been "two separate but potentially related malicious attacks" in recent days.

The Yahoo! service also failed customers last year when a break in the trans-Pacific fibre-optic cable saw a backlog of emails take days to clear once the cable was repaired.

While Google's Gmail service and MSN's Hotmail are potential replacements, along with other cloud-based solutions, indications are that Telecom does not want to leave its customers' experience in another provider's hands.

"We've been asking ourselves what we're running, and basically at the moment we're running a very expensive customer complaints service," a senior Telecom executive said.

The review also comes at a time when Yahoo! globally is seeking to build a more successful business using under-developed strengths in curated content and search capability.

Quin said Yahoo! would be consulted in the review.

BusinessDesk.co.nz

Comments from our readers

On 12 February 2013 at 4:38 pm David Jarman said:

Telecom had better handle any change to teh Xtra email service with great care. A substantial number of their customers are business people who rely heavily on the xtra service and it would be hugely disruptive and expensive for customers to change if the service was dumped, as your article suggests. However this wouldn't surprise me as Telecom seems to have a long history of ignoring the needs and concerns of its customers.

On 13 February 2013 at 7:11 am ROFL said:

One thing that is missing from Telecom is a customer focus. Successive managements and boards have failed to move the government monopoly mindset on; this could be the big break. Yahoo turned Xtra from a mediocre product to a joke and it has taken this long for management to work it out. We used XTRA but also had gmail accounts. Bizarrely the free service was faster, offered more storage, better searching, less spam but the killer for Telecom was that it was SO MUCH MORE RELIABLE. I always remember sitting next to a senior Telecom executive on a flight and after a few to many wines he told me that he always used Vodafone when travelling offshore as he needed something he could rely on. Years later they are still no. 2 in mobile but 2degrees is eating their lunch. While the world has moved on to social networking Telecom is still trying to get its shit together with email. Who still deals with these boneheads?