THE fallout from the 16-hour outage that Singtel-owned Optus, Australia’s second-largest telco with 10 million customers, suffered this month (Nov 8) may eventually have an impact on its corporate structure. Questions are being raised about the role of the Singapore parent company in the snafu. Others ask if critical infrastucture should remain foreign-owned.

Optus chairman Paul O’Sullivan revealed that the chief executive officer and management report to Singtel’s CEO and board, not the Australian Optus board. Since Optus is not listed in Australia, the discipline of having to defend share valuations is absent, it is noted. Ziggy Switkowski, who has previously helmed both Australia’s premier telco Telstra as well as Optus, which has a 30 percent market share, is quoted as saying: “The local governance structure Optus has is not designed to help manage it through a crisis.”

Clearly then, the prompt resignation of Optus’s CEO Kelly Bayer Rosmarin is not the end of its problems. The outage had prevented even emergency calls from being connected as well as shut down rail networks and hospital communications systems. Now, several parallel investigations are under way. The Australian Senate is pursuing a line of inquiry that could result in new laws that would ensure that community interests and safety are always protected in any systems failure. Canberra’s communication watchdog will undertake a separate probe into the functioning of the emergency calls system. The communications minister has ordered a ministerial investigation. The probe into the Optus outage will be far-reaching and forensic, with the report expected to be delivered in February 2024.

Then there is the issue of adequate compensation for the outage. Optus offered 200 gigabytes of free data. But there is a good chance that businesses that suffered losses will pursue financial compensation under Australia’s consumer laws. Legal experts opine that if matters end up in court, they will rest on a legal test: did Optus, as the service provider, exercise “reasonable care” before and during the outage?

It should be noted that a year ago, Optus suffered a massive data breach. Personal information contained in drivers’ licences and passports, and patients’ identification numbers used in Australia’s universal medical care system were stolen from its computers in what Canberra described as a “basic hack”. Optus insisted that it was a sophisticated operation. In any case, the Australian government demanded that Optus pick up the replacement costs of all the identity documents of affected customers.

This time, Optus has already conceded that the corporation had never held a crisis-planning simulation for an outage of this scale. The Senate hearing was told that Optus believed that the level of redundancy built into the system meant such a crisis was unlikely. Thus, planning did not cover worst-case scenarios. It is now obvious that there is a clear difference between confidence and being up to par in a crisis. What this affair is going to cost the company, both in terms of compensation as well as its market share, remains to be seen.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

More broadly, the outage serves as a sharp reminder of how much of modern life is interconnected; failure at a single point can wreak havoc on key nodes down the line. So it is incumbent on governments and regulators to set the standards for comprehensive risk management and contingency planning for every systemically significant bit of infrastucture.

And after this event, most Australians seem agreed that the advent of the cashless economy should wait.