Communication failure as Optus opts out after blackout

Optus is at risk of fines, compensation claims and the loss of lucrative government contracts after a ‘network engineering issue’ plunged up to 10 million customers into a 12-hour communications blackout.

Optus chief executive Kelly Bayer Rosmarin.

Optus faces potential fines, compensation claims and the loss of lucrative government contracts after a “network engineering issue” plunged up to 10 million Australians into a 12-hour communications blackout.

The unprecedented failure of the nation’s second largest carrier caused chaos for emergency services, hospitals, transport and businesses.

The federal government savaged the company for acting too slowly to alert and update customers, after it was forced to ­ensure triple-0 emergency services remained operational, while the South Australian government warned it would consider switching carriers.

The network crash came just over a year after cyber criminals hacked into Optus’s database and published a trove of personal and identity information, leaving customers exposed to the threat of ­financial crime and opening the company to accusations of acting too slowly when the attack ­occurred.

The Optus network went offline about 4am (AEDT) on Wednesday, with the company issuing its first statement online at 6.45am. Chief executive Kelly Bayer Rosmarin did not speak publicly until a radio interview at 10.30am.

It took until mid-afternoon for the company’s engineers to start the process of restoring some services, with the entire network back online by 6pm.

Ms Bayer Rosmarin told The Australian the company “had some ideas” what had caused the outage but would wait until its ­engineers had conducted a full ­investigation before sharing further details. “What I can say is it is a very technical network engineering issue,” she said.

Ms Bayer Rosmarin denied the outage was caused by a major network upgrade.

“As a critical infrastructure provider, we aim to give our customers a service that works 100 per cent of the time every day of the year, 24/7, and on most days we succeed,” she said.

“Today was a day where we didn’t succeed in achieving that, but it’s a very rare occurrence.”

The total failure of Optus’s mobile network, internet and landline services was deemed by technology experts as being without precedent.

Ms Bayer Rosmarin defended the company’s communications with customers.

“We’ve been extremely forthcoming with information and we’ve put a notice out straight away. We’ve kept our messaging very simple and easy to digest,” she said.

“But with customers not being connected to our network, they can’t always receive messages from us.”

Compensation claims

The federal government ­demanded answers to how such a fundamental failure of the company’s central network systems could occur, and flagged the ­potential for the telco to be ­exposed to significant compensation claims.

However, executives at Optus have ruled out any refunds for customers, with Ms Bayer Rosmarin saying that “refunding people for one day is probably less than $2”.

“We are going to look at how we reward our customers for their loyalty and patience,” she told The Daily Telegraph, deciding rather than direct compensation that “we might choose to do something that is more valuable.”

“We are going to look at how we reward our customers for their loyalty and patience”, she said, although she repeatedly declined to be specific.

Optus managing director of customer solutions Matt Williams also told the Telegraph that “we are not talking about compensation”.

The crash caused widespread chaos with a breakdown of fundamental services across the country, including the stoppage of the Melbourne suburban rail ­network. Several hospitals were also forced into a code yellow alert while some Optus-based ­EFTPOS services were also rendered inoperative, affecting small businesses and banking systems.

Issues with the network were reported in Perth, Melbourne, Brisbane, Sydney and Adelaide, creating major delays for ­commuters and hitting health services.

South Australian Premier Peter Malinauskas said his government would consider switching telcos, calling Optus’s lack of communication disappointing.

“There has not been a greater degree of communication coming out of Optus up until this point, which is disappointing,” Mr Malinauskas said.

Communications Minister ­Michelle Rowland had demanded Optus be upfront with its customers early on Wednesday.

“We rely so much on our telecommunications devices, including for consuming our media, and when that’s not available, that is noticeable,” Ms Rowland said.

“I think it is important for Optus to continue to step up. I think customers expect this. Customers are clearly frustrated about it and Optus should respond to that accordingly.”

The opposition demanded the government intervene to establish the cause of the failure and ensure such a “catastrophic” event didn’t occur again.

“The government needs to say what are they doing to help bring this to an end,” said opposition communications spokesman David Coleman.

“This is a catastrophic incident.

“There’s no precedent for an incident of this kind, and Optus needs to do everything it can to get this resolved, communicate with its customers and the government needs to get on the front foot in ­assisting Optus to resolve this very serious issue.

“The government has a lot of powers around cybersecurity and other issues and the government can’t simply say, ‘it’s not about us’.”

National Retail Association ­director Rob Godwin said that a day after the RBA’s 13th interest rate hike in 18 months, the Optus outages had dealt retailers and their operations yet another blow.

“Small businesses seem to be the most adversely affected,” Mr Godwin said.

“This is costing businesses thousands of dollars in sales that they are now in dire need given yesterday’s rate hike … It’s times like these we see the necessity for cash to remain a fail-safe option for payment.”

The Defence Department’s cyber agency, the Australian Signals Directorate, had been alerted to the incident but deemed the issue a matter for Optus.

Cyber and security experts warned that the outage revealed vulnerabilities in critical infrastructure networks despite a rise in cyber security incidents.

Strategic Analysis Australia ­director Michael Shoebridge criticised the federal government for failing to implement a national strategy to prevent future incidents. However, he said the outage appeared more like a technical problem, given the absence of ransomware demands.

Cybersecurity expert Mark Sayer said the outage was a wake-up call for businesses that had ­become too reliant on internet connectivity for critical applications. Mr Sayer, who used to be ­Accenture’s cyber defence managing director, said the outage showed how critical infrastructure services should never wholly rely on a single internet connection.

“No matter how much redundancy is built in, these types of outages can and will occur … critical infrastructure like public transport, should never be relying on a single internet connection,” Mr Sayer said.

The Optus outage affected the banking system for much of Wednesday’s business hours. Businesses reported they were unable to take payments on devices reliant on Optus’s mobile network.

Commonwealth Bank said its call centres were unable to take or make calls.