Telecom says it will consider releasing customers from their contracts on the trouble-plagued XT network if they have been severely affected by its failures.
The network has suffered four serious disruptions since it was launched in May. The most recent was on Monday evening and affected areas south of Taupo.
Rival mobile phone companies say they are fielding tens of thousands of inquiries from Telecom customers considering switching over.
Telecom says its staff will use a tool to assess how seriously customers have been affected by the network faults on a case-by-case basis.
It says the most affected will be able to leave without paying termination fees.
Competitor Vodafone says it is getting inquiries from thousands of Telecom customers looking to switch because of continuing problems with the XT network.
Vodafone spokesperson Paul Brislen says sales staff are working twelve hours a day, seven days a week trying to keep up with demand.
Mr Brislen says most inquiries are not coming from XT customers - who are mostly locked into lengthy contracts - but from those on the older network, which is due to be switched off in 2012.
Larrie Moore, general manager of sales at the newest mobile company, 2degrees, says it is signing up thousands of new customers.
Earlier, Telecom had refused to make clear whether customers who wished to leave the XT network would be held to their contracts, saying only that they would have to talk through their situation with Telecom staff, after which a decision will be made on a case-by-case basis.
The head of the company which built Telecom's XT network says solving the system's repeated faults is its highest global priority.
Alcatel-Lucent global chief executive Ben Verwaayen says it takes full responsibility for the network's problems and says its best experts are now in New Zealand investigating the faults.
"We have networks all around the world working, so we're going to fix this."
He would not speculate on the cause of the fault, saying the only thing that matters is that people have a reliable network.
Mr Verwaayen says he doesn't know how much longer it will take to stop the network disruptions because there are various layers of technology involved.
On Monday, Alcatel-Lucent's New Zealand head, Steve Lowe, resigned.
Telecommunications analyst Paul Budde says the cause would seem to be a fundamental design problem, and such faults are not easily fixed. He says the continuing problems could jeopardise Telecom's bid for work in the Government's rollout of ultra-fast broadband.
111 system under scrutiny
The Government has not ruled out regulating to ensure phone companies prioritise 111 calls when networks become unstable, after Telecom admitted some people had difficulty making emergency calls during the latest XT failure.
Communications Minister Steven Joyce says officials are working urgently with Telecom on the issue of ensuring emergency calls get through.
"The question that we have to address is that, firstly, is there a way we can ensure that cellphone operators take their 111 calls more seriously than they do now," he told Morning Report.
Telecom chief executive Paul Reynolds has said a number of XT customers south of Taupo had difficulty making 111 calls but the integrity of the emergency system was not compromised at any time.
At a news conference in Auckland on Tuesday, Dr Reynolds said Telecom was aware of one failed 111 call from a man who tried to call during a street brawl in Christchurch on Monday. Police were alerted by calls from other members of the public and were not delayed by the network failure, he says.
Telecom says the mechanism that enables XT calls to be switched to another network where there is no XT coverage didn't work during Monday's fault.
Although voice calls were not getting through, there was still network coverage, which meant switching system did not come into operation.
Compensation offer
Telecom has announced a $10 million deal to try to retain XT mobile customers and has put Alcatel-Lucent on notice over the failures.
The company spent almost $5 million on compensation for customers most affected by the January fault, including many in the lower South Island.
Earnings warning
Dr Reynolds has warned the company is expecting its full-year earnings to be near the lower end of the $400 million to $440 million band it had previously advised, as a result of the continued failure of the XT mobile network.
The fall was largely due to the compensation it is paying disgruntled customers.
