BSNL Buying Outdated 2G Technology

This is a story of a flawed business strategy being pursued by one of the most powerful, and allegedly a not-so-clean, CMD of a mega public sector entity. He has incurred the wrath of the Prime Minister’s Office (PMO), reportedly got rid of his Secretary, allegedly caused a huge loss to the exchequer, and possibly crafted tenders to favour select foreign suppliers. Yet his juggernaut moves on. Despite several charges, Anupam Shrivastava continues, and thrives, as the head of the state-owned telecom major, BSNL. The reason: the blessings of a brother of his former boss, Ravi Shankar Prasad, the former telecom minister, and a powerful lobby within the PMO. In the recent past, Shrivastava allegedly caused a ₹1,000-crore loss to the exchequer as he released unauthorised payment to a subsidiary of a Chinese firm. He issued advance purchase orders to Finnish Nokia and Chinese ZTE to supply network equipment for the firm’s ₹6,000 crore national mobile network expansion. Critics charge that the tenders were drafted to favour the two firms. Recently, JS Deepak, the former Secretary (Communications) was shunted out because of the delays in the laying of optic fibre cables in the North East. However, the fault lay with Shrivastava, who had cancelled the tender. This article focuses on the CMD’s myopic vision to expand in 2G, even as the Indian private players, and other majors worldwide, aggressively move towards 3G and 4G.

- Anil Tyagi

ALREADY Chhattisgarh CM Raman Singh has raised con-cerns about 2G in LWE areas installed by BSNL, now other states too have objected. World over, 2G services are being phased out, so what is BSNL doing? When most of the leading Indian telecom operators are focusing on 4G rollouts, Bharat Sanchar Nigam Ltd (BSNL) has placed orders for 2G system in large numbers. Last year it invited bids for procuring 3.10 crore mobile connections, out of which 59 per cent is 2G, 36 per cent is 3G and just under 5 per cent is 4G. The details are given in Table 1.

But, the incumbent Indian telcos are buying the technology in just the reverse order—80 per cent is 4G, 17 per cent is 3G, and 3 per cent is 2G.

BSNL has already placed orders on Nokia and ZTE for the above project which is worth ₹6,682.44 crore. It is making new investment in the 2G network for replacing the old 2G network on the grounds that old 2G equipment consumes more power and thus has higher operating cost. But this objective of opex reduction can be achieved by closing old 2G network and putting new 3/4G BTS sites at these locations and migrating 2G customers to 3/4G services. Even otherwise also, execution of the project to replace the old 2G network with new 2G equipment will take at least one year and only one year will be left by the time the 2G license of BSNL expires in April 2019.

Currently, BSNL is using non liberalised, administratively allotted spectrum in the 900 MHz and 1800 MHz bands for providing its 2G services. BSNL has total of 138.2 MHz in the 900 MHz band, and 67.4 MHz in 1800 MHz band. The spectrum was allotted in 1999 and will expire in April 2019.

However, if BSNL wants to continue using this spectrum after April 2019, it has to pay the market price and the same can then be used for providing any type of services—2G, 3G or 4G.