BSNL losing battle due to government policies

In the times of intense competition in the telecom sector, government policies and decisions are jeopardising the future of State-owned Bharat Sanchar Nigam Ltd (BSNL). The case here is that of the allocation of non-standardised Broadband Wireless Access (BWA) Spectrum to the BSNL, while private operators have got more efficient radio waves to launch their high-speed broadband services.

Moreover, despite getting inferior spectrum, the BSNL was asked to pay amount similar to what private companies paid after bidding. Pan-Indian BWA spectrum was sold for Rs.12,847 crore. While only one player opted for the bidding process last year due to high prices, the BSNL was given no choice to opt for circles and forced to pay Rs.8,000 crore for pan-India licence (barring Delhi and Mumbai circles where MTNL operates). And this is when the State-owned company suffered a loss of over Rs.1,800 crore in the last fiscal, a first in the company's history.

For BWA services, most private operators have shown interest in adopting LTE (long term evolution) technology due to its high-speed and greater efficiency. But the BSNL has been allocated band on which it cannot launch LTE services. While private operators can use both WiMax and LTE technologies, the BSNL will have no road map for LTE, which is being dubbed as the technology of future.

The BSNL has been allocated BWA spectrum in higher frequency range (2.6 GHz) against lower frequency radio waves (2.3 GHz) given to private players. Lower frequency means better services and less capital expenditure on infrastructure. Here too, the BSNL's position is being compromised compared to its competitors. Even if the BSNL uses allocated spectrum for WiMAX services, it will not get the advantage of economy of scale globally. With the telecom industry more focused towards LTE, its equipment are likely to be cheaper in future.

And it is not all. The Department of Telecommunications has found something amiss in the roll out of BWA services by the BSNL. Its top management has reportedly allowed “cheap access” to some “shell companies” to its precious resources, including costly BWA spectrum in metros (for which the BSNL paid Rs.8,000 crore to government), 50,000 mobile towers and 20,000 of its offices.

While ordering a detailed inquiry into alleged irregularities in the selection of WiMax franchisees in 2010, currently being conducted by DoT's Finance Wing, Communications and Information Technology Minister Kapil Sibal noted that “these shell companies are more interested in selling their stake to potential buyers rather than broadband network roll out.”

Welcoming the inquiry into the alleged scandal, Sanchar Nigam Executive Association General Secretary G.L. Jogi alleged that the BSNL top management changed rules and regulations after the bid was finalised.

“All these steps would not only hit the competitiveness of the BSNL, it would further deteriorate financial condition of the State-owned company. We have urged Mr. Sibal to scrap this deal and also give the BSNL choice to operate from circles of its choice for financial viability,” he said.

“We have informed about all these anomalies to the Minister. While the BSNL paid Rs.8,000 crore for BWA spectrum, these handpicked companies were gifted all prime circles for operations and given concessions for making payments. ,” Mr. Jogi added.