Argentina's Government Orders Telefonica's Movistar to Compensate Consumers for Outage

Category: Technology / May 08, 2012 4:06PM EDT

Argentina ordered the Movistar unit of Spain's Telefonica to pay about $42 million in compensation to clients who suffered a massive mobile phone outage last month, government officials said on Tuesday (May 8).

On April 2, Movistar customers were without service for several hours. The government said the company must pay 10 pesos ($2.25) to each of its roughly 18 million users, plus a small fine of about 6 million pesos ($1.4 million) to the state.

Planning Minister Julio De Vido said the measure was aimed at setting an example and averting future problems.

The fine is 6,075,000 pesos and they are to compensate 185,000,000 pesos or 10 pesos to each client. This clearly speaks to the need to impose an example and preventative penalty for the suspension of a service that is so elemental, De Vido said.

De Vido also urged telecommunications companies to boost investment in land lines.

We are also going to demand fixed line providers to make the investments that they're not making today. It's not a threat, it's a warning to those who invest, because users don't just get telephone communication through land lines, but also bandwidth, and in some cases video, and it is their own business that they aren't taking care of, De Vido added.

The minister said Telefonica has the option of appealing the compensation order and fine if it so chooses.

Officials at the Spanish company declined to comment.