Pelephone Abandons Multi-million-shekel Project After Four Network Failures

The plan to install new servers from the U.S. company Hewlett Packard Enterprise was dropped after the latest network breakdown

A Pelephone stand
Tomer Appelbaum

Hit by no less than four network failures in two weeks, mobile operator Pelephone is abandoning a multi-million-shekel project to install new servers from the U.S. company Hewlett Packard Enterprise and reverting to its old system, Pelephone CEO Ran Guron told TheMarker on Wednesday.

The latest failure occurred on Wednesday morning but was quickly repaired.

“It didn’t affect a specific subscriber group, but data availability for many network subscribers wasn’t good enough. We observed difficulties in getting and making calls and certain problems with data. We estimate about 20% of our customers experienced problems,” said Guron.

The failure was the final straw for the company, which had been gradually replacing older HPE servers over the last six weeks. The last of the new devices were put into operation 10 days ago and that finally revealed the problem.

After the system went down again Wednesday morning, “We realized that the system isn’t stable enough and we decided to move all our customers to the older system,” Guron said.

Over the Rosh Hashana holiday, Pelephone suffered the most serious of the four failures. The failure was widespread and affected all the new servers and all Pelephone subscribers, not just certain segments. The damage was mitigated because that failure occurred over a holiday when usage is relatively low.

Despite the problem Guron wasn’t prepared to blame HPE and denied the company had made a poor – or perhaps lower-cost -- choice, although Israel’s other cellular providers rely on Nokia-Ericsson equipment.

“I won’t comment on it right now,” he said in response to a question about HPE’s responsibility. “We’ll complete an examination and then weigh the issue.”

“We were moving our customers to a new system, the most advanced in the world, whose users include AT&T,” he said. “We decided to continue with HPE. The move began after a year of planning and our aim was to ensure network stability.”

Pelephone, the cellular unit of Bezeq, Israel’s biggest telco, has about 2.6 million subscribers and is Israel’s third largest. However, figures obtained by TheMarker show that in the last two weeks since the problem emerged Pelephone has been losing subscribers to competitors.

The company had kept up a positive momentum over the last months, even as upstart Xfone launched its We4G service.

Industry sources said that the rate of subscriber losses had risen by 30% compared to its typical rate, a number that amounts to thousands per day. However, that number doesn’t include new subscribers the company has recruited.

The sources said the numbers were likely to grow if more network failures occur. Subscribers cancellations have been occurred on a face-to-face basis, at service centers and stands at shopping malls.

Subscriber anger has also emerged on Pelephone’s Facebook, page, too.

“We were stuck in the south yesterday and unable to contact our family. I don’t want to imagine what would have happened had there been an emergency. We, too, are thinking about changing providers,” said one post.

Garon denied the breakdowns had led to a substantial increase in subscriber losses. “We’re being transparent with customers, explaining to them the problem and how we’re dealing with it,” he said,