‘We are victims of a legacy set up by the government’

THE entry of Reliance Jio with its free call offer has implications for all telecom service providers and operators, including Bharat Sanchar Nigam Limited. After incurring operational losses for several years, the public sector unit is now on the path to recovery. Despite its late start in the area of mobile services, it picked up, giving fierce competition to private telecom providers. Yet, it is felt that successive governments have repeatedly failed it. In this interview, V.A.N. Namboodiri, founder general secretary of BSNL Employees Union, explains some of the critical issues involved. Excerpts:

How do you think Reliance Jio will affect BSNL? The BSNL Chairman in some interviews to the media has said that it will have to match this aggressively. Is this government doing anything to help BSNL?

It is starting a new combo plan, an unlimited 3G mobile data plan, at a monthly rent of Rs.1,099, to counter this. BSNL has to survive in this fiercely competitive environment. BSNL was formed only to ensure its complete privatisation. In the decade following [P.V.] Narasimha Rao’s government, it was clear that telecom was going to be one of the fastest growing sectors. The government wanted to privatise it, but as it could not do so directly, it wanted to make it into a corporation. It wanted to introduce private companies in the telecom sector. We opposed it. Then the government said that the Department of Telecommunications [DoT] would be there and private companies would also be there. Private companies were given licence to operate mobile services; the existing operator that had been around for almost a century was ignored. We got it [licence] after BSNL was formed. The government said that it would get revenue from licence fees to the tune of Rs.125 crore. The then government changed the licensing policy to a revenue sharing system and the government ultimately got only Rs.5 crore. This adversely affected BSNL also.

Our union did not agree to corporatisation, but the three recognised federations that were more influential agreed. The government gave many assurances that it would be a fully government company. The company was to provide universal service as part of government policy, and for this it was agreed that the government would subsidise it. The loss would be compensated for by the government through the Universal Service Obligation Fund [USOF]. A Universal Service Levy was to be collected from service providers at a defined percentage of the Adjusted Gross Revenue [AGR] as a component of the licence fee. As only BSNL was providing landline services in rural and remote areas, it alone should have been eligible for support from the USOF. But the Indian Telegraph Act was amended and USOF eligibility was extended to private operators too. The collections were substantial, but only a small portion was given to BSNL. It was also decided that a portion would be collected from all private companies, the Access Deficit Charge [ADC], and paid to BSNL. This was assured by the government for the survival of BSNL. This was for maintaining infrastructure, staff, upgrading, modernising, etc. Within the first four or five years, from the fourth position we came to the second position in terms of revenue.

When we initially questioned the government about private players being allowed to provide mobile services and not us, we were told that if BSNL was given mobile services, no private player would come. In 2005, they said BSNL infrastructure would be given to private companies. They cut BSNL to size by not allowing it to purchase equipment. When the tender was to be floated, the then Telecom Minister cancelled it. The employees went on strike after which we got half of what was required. Then a second and a third tender were cancelled. From 2007, BSNL was starved of mobile lines.

We continued in the landline sector, but when roads were widened all over the country, cables were affected. Every now and then a Telecom Minister would say that money would be given. ADC of Rs.1,250 crore is due to us. We returned spectrum and paid Rs.18,500 crore for 3G and BWA [Broadband Wireless Access] spectrum. This took away all our reserves. Every method was deployed to reduce our influence. For the first time, we have shown some improvement. This August too, we provided 23 lakh new landline connections. We are utilising 2G spectrum for 4G. In all the troubled areas, north-eastern region and naxalite-affected areas, we are there.

Are you saying that a deliberate strategy by the government to promote private operators led to the decline in BSNL profits and performance?

First, they were given permission to run mobile services in 1995 itself. We started late, in 2002. From 2004 to 2007, we made rapid strides and competed neck and neck with Airtel and remained the second largest mobile operator. Then the government created roadblocks for us in BSNL’s mobile equipment procurement. It was an artificial capacity crunch. We are victims of a legacy set up by the government. We had an 85 per cent market share which came down to nine.

The reason why BSNL ran into losses was cancellation of mobile equipment and the non-procurement of other equipment. One of our demands has been that the government should not charge licence fee from BSNL and MTNL at least until they recover fully. When the government can show leniency to income tax evasions by private operators, some of whom cheat their way out to avoid paying licence fees, why cannot the same yardstick be applied to BSNL, which was assured at the time of its corporatisation that licence fee would be reimbursed to BSNL?

Successive Ministers in charge have spoken about reviving BSNL. Is there any difference between the previous government and the present National Democratic Alliance regime with regard to this?

This government has an anti-PSU policy just like its predecessor. The basic infrastructure laid by BSNL was fully exploited by private operators to provide wireless services when they have made no contribution to build this infrastructure. The revenues of BSNL started going down after 2007-08 not because there was no market but because sufficient equipment was not purchased to meet the huge requirement.

One reason for BSNL losses is the huge expenditure in the operation and maintenance of rural lines. Of BSNL’s total telephone exchanges, 28,000 are in rural areas. There are thousands of rural exchanges where the revenue is not sufficient even to meet the electricity and labour charges. BSNL has to deploy manpower to provide services in these areas. It is a social obligation of the government in view of the policy commitments of the National Telecom Policy of 1999.

Tenders for mobile lines were repeatedly cancelled by the previous government. BSNL is still the largest broadband service provider. Recently, BSNL made a presentation to Minister of State Manoj Sinha on the current situation and what was needed to strengthen it. Listed therein is a demand for more spectrum to roll out FDD-LTE [Frequency division duplex-Long term evolution], which will help utilise all spectrum assets, make exemption from spectrum charges and licence fees, mandate the Central government and all State governments and PSUs to avail themselves of BSNL services only, ease the cumbersome procurement process and payment of pending dues from DoT, among other issues.

We need to modernise our telecom factories. BSNL has seven telecom factories, the first one in Alipore in West Bengal that was established soon after telegraph services started. But in the late 1990s, the report of the Fifth Central Pay Commission recommended closure or privatisation of all telecom factories. The union took it up with the then chair of the Parliamentary Consultative Committee, following which it was decided that the factories will not be closed. Research and development should be increased so that everything is manufactured locally. All this “Make in India” is mere rhetoric. We have more than 1,000 towers. A section of the management procured towers from outside, not from the telecom factories, as there were commissions involved. It is only now that we are making an operational profit.

Then there are shortages of staff. For the last 25 years or more, there has not been recruitment of field staff required for repair, maintenance, etc. There are around 50,000 contract workers dealing with landline services. There is a deficit of training of the non-executive category too. BSNL has around two lakh such non-executives laying cables, repairing faults or providing connections. Customer satisfaction will not ensue by merely training a section of the management and a few executives. Funds are the main problem. We have to purchase cables and drop wires.

The Minister issues statements but money is not being returned to BSNL. Private service providers give services using other connections without paying a licence fee. TRAI [Telecom Regulatory Authority of India] doesn’t look into these issues. Taxes forgone in respect of some of these providers are shocking. And then the Cellular Operators Association of India dictates terms to the government. It is a cartel of private telecom operators. The latest is that they won’t give interconnectivity to Reliance Jio. BSNL is not even discussed in the media. Undoubtedly, Reliance Jio will affect everyone, but private companies will suffer more. It is not worried about profits. It has deep pockets and can run on losses for some years. When all other companies perish, it will raise tariffs. They are openly admitting that four or five companies will suffer.

Should not the government intervene in order to protect a public sector undertaking (PSU)?

The government company must be given subsidy; only then can it survive. If the government had not cut down our growth in 2007, we would have been able to compete. The government tried three times to disinvest BSNL. We did not allow it. Now we are just about maintaining our growth. How can the Prime Minister openly advertise for a private company? He said at the Independence Day rally that BSNL and MTNL were reviving, but then the Niti Aayog recommended that BSNL and MTNL should be sold to strategic partners. When we protested, it denied the media reports. But this government is different from the previous one; it will do what it wants to do. It is a matter of time.