[Reader-list] More Telecom Scam

[A. Mani]

(from http://newsclick.in/india/bleeding-bsnl-help-private-operators-other-telecom-scam
)

Bleeding BSNL to help private operators: The other Telecom scam

Prabir Purkayastha, Newsclick, May 11, 2011

The 2G scam has shown how scarce national resources like the spectrum
have been given at throw away prices to big capital. In this game,
there are not only older players such as Reliance, Unitech and Tatas,
but also newer players closely linked to certain political parties and
figures. DB Realty and the close proximity of Shahid Balwa with
Kanimozhi and Sharad Pawar has been doing the rounds for quite some
time and is now becoming public.

The 2G scam did not end with just the allotment of the spectrum. SWAN,
Reliance and others had very little desire to invest in
infrastructure. It is now confirmed by CAG that the investment in
infrastructure by either SWAN or Unitech before selling their shares
was minimal. So how did they manage to get subscribers and start
services?

This is where Raja came in again to help the 'friendly' companies to
whom he had awarded licenses illegally. He issued BSNL, the state
owned telecom utility, to provide 'roaming' services to these
companies who had no infrastructure. This roaming is not the usual one
of extending services to customers of other companies when they are
outside their licensed area, but providing such roaming service even
within the licensed area of the company. This meant that without
putting up any cells or towers, these companies could provide services
by riding on BSNL's infrastructure and pretending it is some kind of
roaming service. This was the result of a direct order to BSNL from
the Department of Telecom under Raja's aegis. No other telecom company
was asked to provide such services to the new entrants.

It is unheard of in any infrastructure services for one company to
provide infrastructure to another. There has been talk of sharing
towers – common towers can be provided on which each company could
mount its own cells, but even here this has been more in the realm of
discussions than actual practice. However, providing all
infrastructure for a competitor and pretend that it is some kind of
roaming service is obviously using one company's resources to help a
competitor company. Obviously, this was using BSNL's resources to its
detriment to help subsidise the operations of companies such as
Reliance, SWAN and others.

One of the reasons that Unitech and SWAN could sell their shares at
such high prices was because they could also claim they had started
services and acquired subscribers, all piggy backing on BSNL. The BSNL
employees' unions had raised these issues a number of times earlier
with the PM and the Minister, but to no avail. Hopefully, the CBI will
take cognisance of such additional measures that Raja took to help
companies such as SWAN and others to make the 2G license even more
valuable. While selling spectrum cheap was transferring peoples'
resources to big capital, using BSNL to subsidise other telecom
companies is to make BSNL increasingly less profitable and ultimately
sick. In this way, BSNL, which at one time had a valuation of lakhs of
crores will soon be seen as loss making and to be sold at a pittance.
This is the trajectory the current Government was following under
Raja. It remains to be seen whether Kapil Sibal would be any different
on this score.

Raja did not only ask BSNL to give its infrastructure to other telecom
companies. Over the last few years, he ensured that BSNL could not
place orders for new equipment and get new customers. In 2006, Airtel
and BSNL were running neck and neck with a subscriber base of around
20 million lines each. After Raja took over, he first threatened to
cancel the tender for additional 45.5 million lines floated by BSNL
under the previous minister, Dayanidhi Maran. After the BSNL employees
took to the streets and the left took this issue up, he reluctantly
cleared the order but by slashing it to 50%. Not surprisingly, BSNL
could add only 30 million lines from 2007 to 2010 while Airtel added
another 90 million in the same period. In the most lucrative circles –
AP, Tamil Nadu, Gujarat, Maharashtra, etc.,>in the country, BSNL could
not add any new subscriber as it had no additional GSM equipment.
Today, BSNL is falling behind it competition not because it lacks the
capability but because of a deliberate policy followed by the
Department of Telecom and the UPA Government.

There have been other restrictions on BSNL for procuring equipment.
While BSNL has been barred from procuring Chinese equipment for
security reasons, other private operators have not been so barred. A
further security instruction issued by the Home Ministry and the
Department of Telecom was that all source code for telecom equipment
should be given to BSNL, again for security reasons. The only
equipment manufacturers willing to abide by this condition were the
Chinese. The result – BSNL cannot procure equipment from any party and
yet satisfy the two 'security' requirements laid down by the
Government. These restrictions apply only to BSNL and no other telecom
player.

One can go into great details of how many additional measures have
been taken over the last decade to convert BSNL from a company that
could fund its entire expansion from virtually its internal resources
to today, where BSNL is likely to be a loss making company.

While the mobile story has been one of denying BSNL equipment so that
they could not expand at the rate required, the fixed line business is
even worse. Here, the private players are not willing to go into rural
and loss making areas, offering services to only commercial and high
revenue areas. The private operators were legally bound under their
license terms to give service on demand to anybody in their licensed
areas and also provide rural telephony. People may have forgotten but
the induction of private players in fixed line services was supposedly
for providing rural connectivity. Even today, the private players
routinely pay token fines and do not provide services to loss making
and rural areas. BSNL is the only telecom company that provides
services to such areas and customers.

nitially, the TRAI had initially considered that BSNL should get an
Access Deficit Charge as it is the only company servicing such
customers. Over a period of time, this was whittled down and finally
merged with Universal Service Obligation fund. Since this levy is paid
by all telecom companies, this did not help BSNL. Effectively, BSNL
was providing rural services and also paying from their own USO levy
for the same. Worse, with cellular operators also being entitled to
draw from USO fund, BSNL is in fact now paying out more than its
receiving, while being the only fixed line company providing services
to rural and low paying areas. Incidentally, I am not aware of any
country where USO fund is being also given to cellular operators.

The question before the people is this. If BSNL is allowed to become
loss-making and finally privatised, will the rural and low paying
subscribers get any service or new connection? If the long-term future
of telecom is in Internet connectivity, will not the physical fixed
lines be the backbone of such an Internet infrastructure? Allowing
BSNL to be run down in this way, is not the Government frittering away
valuable public resource?

The mode of operations where a state owned company subsidises its
competition is not restricted to BSNL alone. The same modus operandi
is visible in the case of Indian Airlines/Air India. Here also, the
pilots have charged that Air India management and the Civil Aviation
Ministry has worked in the interest of private carriers by Air India
giving away lucrative routes, reducing number of flights on major
trunk routes, taking up loss making routes. Initially, they were also
asked to 'share' their resources with other private parties in the
same BSNL mode. The Radia tapes indicate that Praful Patel could have
major stakes in one of the private airlines, which has also been
favoured in various ways by the Ministry of Civil Aviation.

The loot of public exchequer today is far more extensive than what has
come out in public. While Raja may have got caught with his hand in
the till on the 2G issue, there are numerous other cases where he has
got way free
or the Manmohan Singh Government, all this is a public relations
issue. It is not that scarce national resources are being transfered
to the capitalist class. For him and his ministers, it is how to dress
all this up in a way that its image is not hurt in spite of the
continuing loot. That is why are now to have a senior group of
minsters carrying out a public relations exercise each day, while no
effort is made to stop the loot. The image, not the reality, is what
concerns this Government. This is the tragedy for the people and this
country.


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A. Mani




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