October 13, 2019

Organiser’s Flawed Vision of the Telecom Sector

P Abhimanyu

IN its July 16, 2019 issue, Organiser, the RSS’s mouth-piece, has spit venom against the public sector in general and against BSNL in particular. The magazine has published an article, wherein it is stated that, laziness, indifference and barren dullness are the well-known marks of the public sector. By publishing such an article in the Organiser, the RSS has exposed its true colour, vis-à-vis the public sector of the country.

Further, it may be noted that the publication of this article coincides with the extra ordinary push being given by the Narendra Modi government, to privatise the public sector and to hand over the huge assets of the public sector, to the big corporates, at throw-away price. Without a proper assessment of the current developments taking place in the telecommunications sector internationally, the article published in Organiser states that, developing world class telecommunications infrastructure is difficult to conceive without private sector capital. Let us see to what extent this statement is correct.

The arena of manufacturing of telecommunication equipments was dominated for decades together, by the US and European multinational companies like Motorola, Nokia, Ericsson and Siemens. With superior technology in their hands, these companies were exploiting India and the other third world countries. However, today, all these companies are cut to size by the Chinese companies, Huawei and ZTE. With their superior quality and competitive prices, these two Chinese companies are dominating the manufacturing of telecom equipments today. Undoubtedly, the world has recognised Huawei as the leader in developing the state-of-the-art 5G mobile technology. Contrary to the claim made in the above mentioned article of Organiser, both Huawei and ZTE do not belong to the private sector.

It is also important to recollect here that, in the late 1980s, the C-DoT, a government of India organisation, developed telephone exchanges with electronic switches, suitable for Indian climate. Till then, the electronic switches manufactured by the Western multinational companies could run only with air-conditioning, involving huge expenditure. However, the electronic switches developed by the C-DoT could function without air-conditioning, and thereby cut down the expenditures to a big extent. These C-DoT switches became a big hit and were exported to nearly 70 developing countries. However, succumbing to the pressure of multinational telecom manufacturing companies, the government of India itself starved the C-DoT of funds. As a result, the C-DoT has become a lame-duck today. However, the experience of C-DoT disproves the argument that, only private capital can develop world class telecommunication infrastructure.

The article published in Organiser, also asks why we should keep afloat the consistently loss making, market-share losing Air India, BSNL & MTNL?

We would like to ask the Organiser, whether Air India, BSNL & MTNL alone are loss making? In the aviation sector, we have seen the collapse of Kingfisher, which was a private company. Recently, we saw the collapse of another private sector airline, the Jet Airways. It has also come to the light that, the promoters of both Kingfisher and Jet Airways had siphoned off huge amounts, which is also one of the major contributing factors for the collapse of these airlines. Why is the Organiser hiding all these issues and targeting Air India alone? This only proves its pro-private bias.

So far as the Air India is concerned, the whole country knows that, its crisis is man-made. This fact has been accepted by the parliamentary standing committee also. It is an open secret that the disastrous decision taken by the UPA government for merging the profit making Air India and Indian Airlines, the nefarious decision to re-allocate the the premium and profit making routes to the private airlines and the fatal decision of the government to purchase a whopping 111 new aircrafts in one go, are the root-causes for this crisis. All these facts are being concealed and Air India has been made the whipping boy.

Coming to the telecom sector, we wish to tell the Organiser that, it is not only the BSNL & MTNL which are loss-making today. Vodafone, which is the biggest mobile company in the world, has shut down its operations in India. After running into huge losses, Vodafone India has been merged with the Idea. Similarly, big brands like the Tata Group owned Tata Tele-services and the Anil Ambani owned Reliance Infocomm have also been closed down. Aircel, owned by a Malaysian tycoon, is also closed down. Then, why without discussing all these things, the Organiser has singled out BSNL & MTNL alone?     

It is a fact that the entire telecom industry in India is gripped with a crisis. The private sector giants, Airtel and Vodafone Idea, are also running in huge losses. Reliance Jio is said to be the only profit making telecom company today. However, the US research and brokerage firm, Bernstein, has reported that Reliance Jio is cooking up its accounts, to show that it is running in profit. As per the report published in the Business Standard dated July 27, 2018, Bernstein has stated that, Reliance Jio ran into a loss of Rs 3,800 crore in the October to December quarter of the financial year 2018-19. However, the accounts were cooked up and it was shown that the Company earned a net profit of Rs 831 crore in that quarter. Hence, what all is being shown by Reliance Jio, in its account book, is untrustworthy.

It is an undeniable fact that, both Airtel and Vodafone Idea have massively lost their market shares to Reliance Jio. However, it is a remarkable feat that, despite running in loss, BSNL has not lost its market share. In fact, BSNL is the only company, next to Reliance Jio, which is consistently increasing its market share every month. Even in the month of September 2019, BSNL has added 13.5 lakh new mobile customers. While this being the fact, it is unfair on the part of Organiser, to brand BSNL as a consistently market-share losing company.  

Both Airtel and Vodafone Idea are debt-laden and their debt comes to more than Rs 1 lakh crore each. The Mukesh Ambani owned Reliance Jio is also having a debt of more than Rs 2 lakh crore. The total debt of the Indian telecom sector comes to Rs 8 lakh crore. Comparatively, BSNL’s debt is very small, which is below Rs 20,000 crore.

The Organiser has also prescribed in its article that, BSNL & MTNL must be privatised, and that their buildings and sites might be sold, which would fetch colossal amounts which could be used to compensate the employees for their loss of jobs. By making such a prescription, the Organiser has only revealed its desire that, the huge assets of the public sector should be handed over to the private.

But, the Organiser should keep in mind that, whenever natural calamities occurred in this country, be it the Chennai floods, the Visakhapatnam and Odisha cyclones or the Srinagar floods, it was only BSNL which provided service to the victims and also assisted the relief and rescue operations. On the contrary, in times of all the above mentioned calamities, the private telecom service providers shut down their services, to protect their equipments and installations. These facts have time and again been acknowledged even by the telecom ministers.

Further, BSNL’s existence as a government company, is also very much required to cater to the needs of the people living in the rural, backward and far-flung areas. Even today, BSNL is providing service to the people in such areas, where the private companies cannot make big profits. If BSNL is decimated, naturally people in those areas will be deprived of telecom services.

It is also needless to state that BSNL, as a government service provider, is very much required to counterbalance the tariff manipulations of the private telecom companies. Actually speaking, it is the BSNL, which is playing the role of the regulator in the telecom sector today and not the TRAI. Only because of the existence of BSNL, as a government company, the private operators are not able to raise the tariffs and loot the people. If BSNL is not there, it is sure that the private companies will form cartels and loot the people, by raising the tariffs.

Finally, the Organiser must understand that, it was the anti-BSNL and pro-private policies of the successive governments that came to power, which have weakened BSNL. It must not be forgotten that, BSNL, as a government service provider, got the licence to roll out its mobile services, only seven years after the private companies got the licence. This is a classic example which proves how the policy decisions of the government strengthen the private sector and weaken the public sector.

It is also a fact that, within a short time of getting the mobile licence in 2002, BSNL established its supremacy in the mobile segment also. In 2004-05, BSNL earned a net profit of Rs10,000 crore. However, it faced the government’s onslaught thereafter. The government did not allow BSNL to procure equipments from 2006 upto 2012. All the tenders floated by BSNL were cancelled one after another. Thus, BSNL was starved by the government, of equipment supply. This created a very big setback for BSNL. However, despite government’s attacks and biased policies, BSNL continues to serve the people as a vibrant public sector company. The Organiser should not hide these facts from the people.