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Struggling To Stay Connected

Walk into Reliance Jio’s experience centre at its sprawling office complex in Navi Mumbai and you get a feel of how the Mukesh Ambani-backed telecom company is readying for the future — with cool gadgets that relay the systemic health of your car to your phone, a device that boosts your Wi-Fi network to every corner of your home using electrical copper wires, a connected home solution wherein you get high-speed broadband access, live television channels, streaming video services and internet applications delivered into your living room through a single cable.

Rival operator Airtel is expected to invest nearly $10 billion in the next few years to ramp up its data services capabilities. It is also quietly sewing up partnerships with content players and application providers to stay relevant in a market that is consuming data like never before.

In stark contrast, the two state-run telecom companies — BSNL and MTNL — are still stuck with 2G and 3G services with no clear roadmap on when they will get 4G spectrum to be able to offer any meaningful data services.

“The new paradigm in telecom is data and here, whoever gives the best experience will emerge winners. This experience gets driven by device, content, access, application, storage, and security. You need to put together an ecosystem to succeed. The entire DNA of the public sector is not geared towards consumer delight. BSNL has a lot to catch up on and that will cost more money. In my view, it is too late for the telecom PSUs,” says Sanjay Kapoor, former CEO of Airtel.

While Kapoor believes that BSNL should close operations, and its assets — towers, land, cable infrastructure — should be sold to private operators, others who have worked with the company reckon that the telecom PSU is still relevant. “The Government can use BSNL in rolling out strategic projects of national importance — be it for Defence or handling disaster situations, which are quite frequent in the country,” says RK Upadhyay, former Chairman and Managing Director, BSNL. Upadhyay was in charge when floods in Uttarakhand, in 2013, shut down all communication services in the area. BSNL was quick to restore its 270 mobile stations and 72 fixed-line exchanges and was the only network available for many days.

Agrees SD Saxena, former Director (Finance), BSNL. “There are many things that private operators will not do, due to unviable conditions, so there is a need for a federal network. If the government decides to wind up BSNL or privatise, then it will have no control over the telecom sector. Will the Centre be comfortable using a private network for strategic purposes?”

A viable counterbalance

Many also see BSNL as a counter to any attempt by profit-driven private players to increase tariffs. “Mind my words, if there is no BSNL, the private sector will eat you. We need a viable counterbalance to have some semblance of competition. We are not in the US, where there are good antitrust laws and there is an impartial regulator. We are governed by people with vested interests so we need an entity that can keep the balance,” says BK Syngal, former Chairman and Managing Director, Videsh Sanchar Nigam Ltd.

Kapoor, on the other hand, believes that any further investment into BSNL by the government is futile. “That stage in India’s telecom lifecycle is over when you needed a public sector player to do rural telephony or other projects of national importance. The private players can be mandated to do the same. You don’t need a full-fledged company for national security and calamities,” he says.

“What we need in the digital world are operators who are fast to understand consumer demands and nimble to cater to that. BSNL still buys equipment through tenders where the lower bidder wins. The best guys in technology are not the cheapest. There is no leeway for BSNL to do that. Bureaucracy sets in with the layers and hierarchy, so how do they compete with players with less than 10,000 people and ten times the size?” he poses.

Talk to existing employees and they get emotional about the future. VAN Namboodiri, founder-general secretary of the BSNL Employees Union, says the current situation is not a new one as the government has, for long, tried to weaken BSNL by hammering its projects and not giving it 4G spectrum.

“BSNL is the company (out of all telecom companies) that has got the least debt. All the other companies are running on more than 1-lakh crore debt. But the loan of BSNL is much less, it’s only around Rs. 13,000 crore,” he says.

He debunks theories suggesting that BSNL should be shut down or be privatised, calling it “all bogus”.

“The government says they will give Rs. 74,000 crore for Voluntary Retirement Service (VRS) to reduce staff. They are prepared to spend money on sending people out, but they are not prepared to give money to improve services and give spectrum? It’s a great contradiction,” he says, vehemently.

Four steps to revival

If BSNL has to stay in business then it will have to immediately do four things, says Upadhyay. “The tendering process to buy equipment needs to be relaxed. It should be open to public scrutiny but in a hyper-competitive market like telecom, procurement and investment decisions are key to survival. Second, customer aspiration is very high so BSNL should get 4G and 5G spectrum immediately. Third, there must be a bold decision on bringing down the staff count. When I looked at the structure, there were 25 or 26 types of cadre in BSNL like daftarikhansama, many that even we were not aware of. Finally, there has to be an asset monetisation programme to unlock value in land, tower and other areas that can bolster revenue.”

For Syngal, the number one thing to do to revive BSNL would be to put in place a governance structure that allows the company management to function independently.

“Does Sunil Mittal (Chairman, Bharti Airtel) take permission from Narendra Modi to buy equipment to fight competition? Are you really allowing the BSNL management to perform? Even the top appointments are compromised,” says Syngal.

But Kapoor insists that reviving BSNL is easier said than done.

“The world is consolidating to three players — the first guy makes money, the second guy is on the brink and the third loses money, so where is the scope for the fourth? You cannot compete with a weak balance sheet. This is a world that will survive on millennial consumption. That generation will be a large part of the market. They have a way of assessing brands and the state incumbents do not qualify to get into their mindset. It’s best that BSNL gets out of the business else it will be good money chasing bad money,” says the former Airtel chief.―The Hindu Business Line

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