Sunday, April 24, 2011

It is possible to save BSNL and only the BSNL employees can do it

It is possible to save BSNL and only the BSNL employees can do it

----------------P. Asokababu


 

  1. Facts on the financial condition of BSNL
    1. Loss in 2009-10= Rs 1823 cr;
    2. Monthly expenditure more than monthly income=Rs 600 Cr
    3. Cash reserves on 31-3-2010=Rs 30343 Cr and at present Rs 1000 Cr(Rs 18500 crore paid for 3G and BWA spectrum fee, and remaining amount expended for other activities including meeting the monthly expenditure exceeding income)
    4. Interest income in 2009-10 on cash reserves is Rs 2472 Cr and it will be nominal in 2010-11 since cash reserves are over
    5. Income on services declining continuously

      2005-06=36138 cr; 2006-07=34616 cr; 2007-08=32842 cr; 2008-09=30169 cr; 2009-10=27913 cr; (average decline per year=Rs 2000 cr)

    6. salaries expenditure is increasing continuously

      2006-07=7309 cr; 2007-08=8809 cr; 2008-09=10331 cr(excluding wage revision arrears); 2009-10=10555(excluding arrears). The salary bill of 2006-07 was 21% of the income on services where as in 2009-10 it was 38% of the income on services. Average increase per year in the salary bill=10555-7309=3246 Cr /3=1082 cr; In any case the increase in salary bill will be Rs 700-800 Cr every year(in case of private telecom companies the salary bill is about 5-7% of the income earned by those companies)

    7. Compensation of Rs 2000 crore per year to BSNL for the losses on rural land lines will not be there from 2011-12 onwards.
    8. Since cash reserve is over, BSNL has to take loans to finance part of its operational expenditure and to finance capital expenditure(expenditure required for network expansion). Servicing the loans taken will be another additional expenditure.
  2. Likely scenario if the present trends are continued
  • As per a news paper report the loss for BSNL will be Rs 4000 Cr in 2010-11 and Rs 10000Cr in 2011-12
  1. Does this mean BSNL became sick company?

    As per DPE guidelines a PSU will be considered 'sick' if it has accumulated losses in any financial year equal to 50% or more of its average net worth during 4 years immediately preceding such financial year. As per the 2009-10 accounts of BSNL , its net worth is Rs 86476 cr. The loss for the year 2009-10 is Rs 1823 cr only. Therefore there is no immediate reason for declaring BSNL a sick company. In case the losses go on increasing and the net worth goes on decreasing, then it will take a few years for BSNL becoming sick. Therefore there is a few years time available for us to prevent BSNL from becoming sick and to make it profitable once again.

  2. Are there cases where loss making PSUs were transformed again into profit making PSUs?

    There are several such cases.

    1. Vizag Steel Plant(RINL)
      was commissioned in 1992 at a cost of Rs 8500 cr. But it continued to post losses every year and after six years, by 1998, its accumulated losses were Rs 3600 crore which was more than 50% of the networth Rs 6500 cr. Thus it was to be declared sick and it was decided by the Central Government to sell it. The then Steel Minister Mr. Jaitley(BJP) told that as per the observations of the Disinvestment Commission in its 12th report, no public purpose would be served by retaining RINL under Government ownership. He told that due to over-capitalisation, technological imbalance and the weak financials of the company, while it was no longer in a position to raise funds from the market on its own strength, the Government too, would not be able to afford it. The Minister further told that it was necessary to disinvest and privatize RINL and stated that enough safeguards would be put in place for protection of the workers. But it was opposed by Trade unions lead by CITU. The Vizag people supported their struggle. The Government was compelled to drop the privatization proposal and to announce a package for revival of the Company. Trade unions motivated the workers to improve the work culture and also compelled management to change its policies. The labour productivity rose from 161 tonnes/man year in 1998-99 to 240 tonnes/man year in the last quarter of 2000-01. This was more than double the productivity that was prevailing in the other steel plants in the country. Due to all these factors the Company started getting profits since 2000-2001 onwards. It became debt free company in October 2003 and wiped out all accumulated losses in January 2006. In 2005 it was declared as a "Mini ratna" Company and there after it was declared as a "navaratna" Company. (Even now the Government is implementing the policy of discrimination against Vizag Steel Plant by not allowing it to have captive mines and allowing the same for the private sector steel plants. The trade unions lead by CITU in Vizag Steel plant are struggling against this discrimination, demanding that it should have captive mines)
    2. SAIL
      For 3 years
      1998-99 to 2000-01) it continuously posted losses aggregating over Rs 4000 Crore. Its surplus/reserves which was Rs 4,359 crore in 1997-98 came down to Rs 34 crore in 2000-01. Its net worth, around Rs 8,400 crore in 1997-98, came down to Rs 4,365 crore in 2000-01. But it started gaining profits since 2002-03 onwards and now it is a maharatna company.
    3. Of the 36 sick CPSEs which received approval for fund injunction by the government, 14 have been nurtured back to health in the last two years.(January 2010 month's bulletin of IPE-Institute of Public Enterprises, Hyderabad)
    4. Out of the 42 PSUs under Kerala State Government, only 12 were making profit in 2005-06 when UDF was in power. The UDF regime lead by the Congress party decided to privatise or close down 25 of these loss making PSUs. After LDF lead by CPI(M) came into power this privatisation policy was dropped and decided to revive these PSUs. Due to this political will of the LDF Government and co-operation from the trade unions, the number of profit making companies increased to 24 in 2006-07 and to 32 by 2009-10. This was done without any retrenchment or VRS. On the otherhand in one year, 719 additional jobs were created in these PSUs. The key points in this turn around is describer as below, by Com Deepankar Mukherjee, Secretary, CITU in his article on this subject:

      "Selective and corrective interventions, regular performance monitoring at the level of the minister, inter-PSU resource optimisation, and strategic co-operation with central PSUs are the salient features of the resurgence of these industries. For example minister of Industries himself is evaluating the performance of each PSU under his control on a monthly basis. A special mechanism of evaluation has been put in place in the office of minister with a view to providing consistent support to the PSUs. In stark contrast to the carrying out of such evaluation through consultants mostly foreign, consultancy came from within. Workers cutting across trade unions have played a vital role in the dramatic changes that was witnessed in PSUs of the state. Take the case of UEI, cited above. In a bold innovative step, a memorandum of understanding was signed among Kerala State Electricity Board the major client of UEI, the industries department, management and trade unions of UEI. Apart from involvement of trade unions in the process, it also shows significance of inter-PSU co-operation or you may call it public-public-partnership instead of public-private-partnership, which has lately become a mantra in reformist circles."

    5. Thus it is an established fact that the loss making PSUs can be revived by the struggles of the trade unions for changing the Government Policies and for improving the work culture and it becomes all the more possible when the Government has the political will to support and strengthen the PSUs as in case of LDF Government in Kerala. It also was proved by the experience of revival of sick PSUs in Kerala that VRS was not necessary for the revival of loss making PSUs.


       

  3. How to reverse the losses of BSNL


     


     

    1. Government must be compelled to take policy decisions to compensate BSNL for the loss making operations carrried out as a social obligation


       

      1. Losses on account of rural wirelines which are uneconomical but being maintained as social obligation must be compensated As per the audited accounts of BSNL for the year 2008-09, the expenditure on rural wirelines was Rs 12681 Crores where as the income was only Rs 2744 Cr. Thus there was a loss of Rs 9937 Cr in that year on rural landlines. The average expenditure on a rural landline was Rs 702 per month where as the income was Rs 94 only. Earlier the Government reimbursed license fee and spectrum charges to BSNL and also ADC was paid by private operators. All this resulted in payment of a considerable amount (Rs 6000 cr to Rs 8000 Cr) as compensation towards meeting the losses on account of rural landlines.For example the ADC paid to BSNL in 2004-05 by private operators was Rs 5000 crores and the license fee and spectrum charges reimbursed to BSNL in the same year was Rs 2200 croree. But as a result of the pressure from the Indian and foreign big capitalists who want to grab the telecom market in India, a serious attack was made by the Government on this compensation, particularly after the enhancement of FDI limit in telecom services sector from 49% to 74%. The license feees and spectrum charges reimbursement was completely stopped with effect from 1-4-2006. ADC was stopped with effect from 1-4-2008. After thus completely stopping the reimbursement of license fee and spectrum charges and ADC, based on TRAI recommendation, the Government granted Rs 2000 crore every year to BSNL from USO fund for the years 2008-09, 2009-10 and 2010-11 as compensation for rural land line losses. From 1-4-2011 onwards even this Rs 2000 crore compensation will not be there. If the Government compensated the Rs 8000 cr loss on rural lines fully, in 2009-10 BSNL would have got a profit of Rs 4000 crores. Therefore the main reason for the losses to BSNL is the abolition of this due compensation to BSNL for the rural land lines which was implemented by the Government coming under the pressure of Indian and foreing big capitalists.(The loss on rural landlines was calculated as Rs 13000 cr per year by BSNL, but by manipulation of figures, TRAI calculated it as Rs 2000 crores in 2008.)


         

      2. Certain social obligations are preventing BSNL from procuring equipment as fast as in case of private operators. Being a PSU it has to follow all the tender rules and procedures for procuring the equipment in spite of the cut throat competition in telecom sector which requires quick procurement of equipment required for increasing the capacity to expand and modernise the services and to grab the market. Also while the private operators are free to procure the equipment from any vendor as per their choice, BSNL has the social obligation of procuring 30% of its equipment from ITI Ltd and this factor also causing delay some times.
      3. The private operators like Airtel etc are expanding their network by managed capacity model as per which the vendor (foreign equipment manufacturers like Ericsson, Nokia, Motorola, Huwaeii etc) will install, maintain and operate the network and the Airtel will only do marketing and branding and overall control. This means the networks of the private operators are operated by the foreign vendor companies and it is against the interest of national security. Hence recently the Government thought of putting the condition that the outsourcing of the operations of the network should be given to Indian Companies only. That is why recently the PMO(Prime Minister's Office) in an internal note, as revealed in Economic Times(dt 20-3-2011)prescribed that the outsourcing of the operation and maintenance of telecom networks should be limited to Indian Companies only. But coming under pressure from the foreign companies, the DoT issued guidelines on national security allowing such outsourcing to foreign vendors(ET 20-3-2011). But this managed capacity model is not allowed for BSNL since the Government has to depend upon BSNL in case of emergencies. From this consideration of national security, BSNL also was prevented for some time from procuring equipment from Chinese vendors where as the private operators were allowed. This opportunity was utilized by private operators to grab a considerable share in the market whereas BSNL was prevented to do so. Thus the social obligation of national security prevented BSNL from expansion and grabbing share in the market. Besides, as a PSU, BSNL has to follow PSU guidelines for procurement of equipment, which necessarily will result in some delay compared to private operators. Therefore due to the very necessity of meeting the social obligation of national security, BSNL has to face delays in procuring the equipment and consequent setback in grabbing the market share. This aspect also should be recognized as a social obligation for which BSNL has to be compensated.
      4. While the private operators were allowed to bid for 3G license in the chosen Circles based on commercial considerations, the BSNL was compelled to pay the 3G spectrum fee for all circles(excepting Delhi and Mumbai where it has no presence). Thus while BSNL paid Rs 10186 crore for pan India 3G license, Airtel paid Rs 5731 crore only for the chosen circles based on commercial calculations. Similarly regarding BWA spectrum license also BSNL was compelled to pay the pan india license fee of Rs 8313 crores whereas the private operators like RCOM, TTSL did not participate in the BWA auction based on their commercial calculations. This means the BSNL was asked to provide 3G and BWA services in all circles even though in some circles it is not profitable. Thus maintaining the 3G and BWA services in all circles by BSNL has to be recognized as an activity of social obligation being carried out by it. Moreover as per the New Telecom Policy 1999 BSNL need not pay any spectrum fee and hence 3G and BWA spectrum fee.Therreefore the licensee fee collected from BSNL on account of 3G and BWA spectrum should be reimbursed.
      5. While BSNL is being asked to carry out wi Max rural project, it has been provided with a fund of Rs 710 crore only whereas the acual cost on no profit/no loss basis will be Rs 2395 crores.
      6. Hence we should recognize the denial of due compensation to BSNL for the loss making social obligation activities as the main reason for the losses to BSNL. The following are to be recognized as the loss making social obligations being carried out by BSNL for which there should be adequate compensation from Government:
        1. Rural land line network installation, maintenance and operation
        2. Delay in procurement of equipment arising due to following the public sector procedure and due to the necessity for meeting the requirements of national security(explanation on this is avaailable in para c) below.
        3. Providing 3G services in all circles irrespective of the commercial considerations
        4. Maintaining the TACs(Telecom Advisory Committees) which are not the requirement of the customer or the Company but the requirement of the party in power)


           

    2. Cancellation of the illegal licenses obtained by the private operators in the 2G spectrum scam


       

      The facts revealed in the 2 G spectrum scam established the truth that several private operators have obtained 2G license by illegal means and occupied the telecom services market illegally. The licenses of all such companies should be canceelled. Since MNP is there now, BSNL should try to see that all the subscribers of these companies migrate to BSNL after cancellation of their license.


       

    3. Collect the amount swindled by the private operators in the 2G scam and use it for reimbursing the 3G and BWA license fee collected from BSNL


       

      The private operators have illegally gained Rs 1,76,000 crores in the 2G spectrum scam. This amount should be collected from them and from the amount thus collected, the license fee paid by BSNL for 3G and BWA spectrum be reimbursed.


       

    4. Procurement of equipment without delay and by proper planning


       

      As detailed above, in view of national security concerns and in view of PSU procedure, some delay is unavoidable in case of BSNL for procuring the equipment for which the Government should pay proper compensation. But this delay should be limited to the minimum and proper planning be there for procurement of equipment without much delay. Political intervention from the Minister/Government aimed at intentionally delaying the procurement should not be there.

    5. Experts genuinely interested in reviving BSNL as a profitable PSU be recruited as CMD and Board Of Directors and the issue of ITS absorption be settled immediately
    6. BSNL should be given the work of laying the optic fibre cable under National Broadband Plan without forming any agency like NOFA for that purpose.
    7. Management should adopt proper marketing and sales strategies
    8. Employees should reorient their work culture and every employee should work like a sales representative for BSNL products and also must take an active part in going to the customers for attending their grievences
    9. All types of unnecessary expenditure should be curtailed.


       

  4. Where to start


     

    The starting point for revival of BSNL cannot be any other thing except the commitment of the employees of BSNL for saving it and consequent reorientation in their attitude to extend better service to the customer, increase the sale of BSNL products, putting pressure on the management at all levels for reducing the unnecessary expenditure and for adopting better sales and marketing practices, fighting against the anti-BSNL policies of the Government and achieving due compensation to BSNL for meeting the social obligations as detailed above and also for procuring equipment without undue delay. The Government is adopting the anti-BSNL policies due to pressure from foreign and Indian big capitalists in telecom sector and due to its orientation to work for their profits. It requires a serious struggle for changing these policies. For this the support of the people and the realisation among the people about the necessity for a viability of BSNL as a PSU is required. For this, we have to go to the people to serve them better and to tell them about the necessity for saving BSNL.


     


     


     


 


 


 


 


 


 


 

Is There A Level Playing Ground Between BSNL And Private Telecom Operators

Is there a level playing ground between BSNL and the Private Telecom Operators?

The Private Telecom Operators always demand level playing ground on par with the Public Sector Telecom Operator BSNL. The meaning is that the BSNL should be treated as a Private Telecom Operator and any concession not given to private operators should not be given to BSNL also. The Indo-US CEO Forum, a body created by the understanding reached between the Indian Prime Minister Mr. Manmohan Singh and the then USA President Mr George Bush in 2006 and consisting of Big Capitalists of USA and India demanded the Indian Government should see that the competition in telecom sector in India between the Private Sector and Public Sector Operators is full and fair. It is thus clear that not only the Indian big capitalists, but also the Big capitalists of Advanced Capitalist Countries like USA, England, France etc are pressurizing the Government of India not to extend any concession to the PSU operator BSNL in case such concession is not given to the Private Operators.

But such an equal treatment has to be extended by the Government only when the Private Operators are carrying out social responsibilities on par with the Public Sector Operators. The private operators have never come forward to fulfill the social responsibilities. Instead, they violated the conditions stipulated in their license to fulfill social responsibility. In the past, the Private Operators did not fulfill the condition of providing 10% of their landlines in rural areas and instead they preferred to pay a meager penalty for violating the condition.

On 6th August 2010there was torrential rain, floods and mudslide in Leh, in Jammu& Kashmir. People in Leh faced havoc. To help them it was necessary to restore the communication links. But the Private Telecom Operators did not offer adequate support for the people of Leh by restoring communication links. They did not come forward to fulfill their social responsibility. Their attitude was condemned by Sri Sachin Pilot, Minister of State for Communications. On the other hand, the Minister praised BSNL. He told that BSNL took all efforts in restoring the basic communication in the region within 24 hours of the flood havoc. It immediately arranged 35 satellite mobile phones.

While BSNL is maintaining the enormous land line network spread throughout the country which it inherited from DoT, by incurring losses, the Private Operators are mostly concentrating on the profitable mobile telephony and maintaining land lines only in urban areas where there is a profit. The landline network being maintained by BSNL alone incurring losses is not a waste. It is a valuable national asset and it has to be fully utilized for making broadband internet service available through out the country and to make our society a knowledge society.

Recently in the Rajyasabha, CPI(M) M.P Smt Brinda Karat asked the question whether it was a fact that while private telecom companies were procuring telecom equipments from Chinese vendors, the BSNL was barred procuring the equipments from the same Chinese companies on the ground of security concerns. To this question Sri Sachin Pilot, the Minister of State for Communications replied that
in the interest of national security, the Government had directed Bharat Sanchar Nigam Limited in May, 2009 that resources should not be procured from the Chinese vendors for deployment in the sensitive regions of Assam, Manipur, Tripura, Sikkim, Nagaland, Arunachal Pradesh, Mizoram, Meghalaya, West Bengal, Gujarat, Rajasthan, Punjab, Jammu and Kashmir, Himachal Pradesh, Uttarakhand and Maharashtra. He further told that participation of foreign companies in strategic sector has bearing on national security. BSNL being a Public Sector Undertaking, its network has to be relied upon in emergency. Because of this discrimination against BSNL, it could not procure the GSM equipment necessary for expanding its mobile customer base and hence its share in the mobile services market declined. Thus it is a proven fact that because the BSNL is shouldering the social responsibility and catering to the responsibility of national security, its share in the market has declined compared to the private operators who do not have such social responsibility. It is another matter that after insisting certain safeguards from the Chinese equipment vendors, the Government allowed BSNL also to procure equipment from the Chinese vendors. But by that time the BSNL lost its valuable market share because of the prohibition.

It is also to be noted that the BSNL is one of the largest employer in the country with 3 lakh employees and implementing reservation in jobs for the SC/ST/OBC sections of the population, thus catering to the requirement of social justice. The private operators are exploiting the labor. At the top level in the management they are paying 10 to 15 crores or more per annum as salary where as their regular employment is minimal and outsourced all their work of net work installation and maintenance to the private agencies(both Indian and forein) who are getting the work done by temporary employees with very low wages and without any trade union and labor law rights. For example the person who comes to the house of a subscriber on behalf of Airtel with Airtel badge to install a broadband connection is not the employee of Airtel, but the employee of the franchisee of Ericsson Company with a monthly salary of around Rs 15000, without any social security like EPF. The private operators are not implementing reservations in the jobs. Thus while the Public Sector operator BSNL is carrying out the social responsibility of providing employment and reservations, the private operators are providing only minimal employment and temporary employment violating all labor laws and not implementing reservations for the backward sections of the society.

Thus it is clear that without carrying out the social responsibilities on par with the Public Sector Operators, the Private Sector Telecom Operators (both Indian and their foreign collaborators) have been demanding and pressurizing the Government not to extend any concession to the Public Sector Operators if such concession was not given to them. Coming under their pressure, the Government and TRAI have abolished the ADC being paid by the private operators to BSNL for incurring losses on account of maintaining landlines and stopped the reimbursement of license fee to BSNL, even though such stoppage is a violation of the New Telecom Policy 1999.

It is because of the carrying out of such social responsibilities incurring losses without any compensation from the Government, the BSNL faced a loss of Rs 1800 crore in 2009-10. But the Government is making a bad propaganda that this loss is due to the wage revision arrears paid to the employees! The policies of the Government of India which are being implemented due to the pressure exerted by the Indian big capitalists and their foreign collaborators have resulted in intentionally sabotaging the improvement in BSNL's share in the market by applying several breaks in the timely procurement of the equipment required for expanding the services, in denying the justified compensation for the losses incurred on account of carrying out social responsibility, and the mismanagement by the ITS officers who refuse to be absorbed in BSNL for years together—all these have resulted finally in the steep decline in the market share of BSNL and the first time posting of loss in the balance sheet of BSNL.

After thus intentionally damaging BSNL's development, the Government appointed Sam Pitroda Committee to recommend how to improve BSNL, which is nothing but a cruel joke. The Sam Pitroda Committee recommended that the BSNL should work like a Private Company, should disinvest 30% of its shares, should bring in a strategic partner from private sector, should bring its top level managers from private sector, should remove one lakh employees by VRS and transfer, should create a subsidiary company in collaboration with a real estate company for utilizing its valuable vacant lands(25 lakh square meters in 7 big cities), and to procure equipment through managed services method(handing over entire work of installation and maintenance of the network to the vendor) etc. This is nothing but privatizing BSNL in quick instalments and handing over the valuable national assets of BSNL at throw away price to the Indian big capitalists and their foreign collaborators.

The BSNL should continue as a wholly owned Government of India enterprise carrying out social responsibility in the interest of the nation and also as a profitable and vibrant undertaking. The Government should compensate BSNL for the losses incurred by it for carrying out the social responsibility in the telecom sector.

All the trade unions and Associations of Non-Executives and Executives in BSNL have come together under the banner of Joint Action Committee and are fighting against this conspiracy and decided to go on a 3 days strike from 19th -21st October, 2010. This struggle requires the support of all the democratic and progressive forces in the country.

-----P.Asokababu

BSNL needs no such surgery

BSNL NEEDS NO SUCH SURGERY

*Sam Pitroda Committee recommendations aimed at intensifying the exploitation in telecom sector by privatizing BSNL in phased manner

* Make the indefinite strike from 20-4-2010 a grand success

* Formulate an alternate pro-people telecom policy and obtain broad based support of the people and progressive forces for saving the telecom sector and BSNL

Appointment of Sam Pitroda Committee

The Prime Minister Sri Manmohan Singh got the idea that the situation of BSNL reaching the stage of posting loss has to be utilized for making the way for its privatization. He appointed a Committee with Sri Sam Pitroda as its Chairman , Sri P.J.Thomas DoT Secretary and Sri Deepak Parekh Chairman HDFC Bank as members to submit recommendations for this purpose. The Committee was appointed on 6-1-2010 and it submitted its report in flash light speed, on 9-2-2010.

Recommendations of the Committee

Following are some of the recommendations of the Sam Pitroda Committee:

  1. Out of the 3 lakh BSNL employees, one lakh have to be removed through VRS/transfer to other organizations.
  2. 30% of the shares in BSNL have to be sold to a strategic partner or sold through IPO(initial public offer). Two thirds of the amount thus received through this disinvestment has to be utilized for meeting the VRS expenditure and for expansion of BSNL network. The remaining one third has to be paid to the Government.
  3. The tender for purchasing 9 crore lines GSM equipment has to be cancelled. The responsibility of installing and maintaining the mobile services network of BSNL has to be handed over to the equipment manufacturers like Ericsson, Nokia, Huwaei etc through the system of "managed services", as is being done by the Private Operators like Airtel, Vodafone etc. This will help in reducing the staff and in reducing the capital expenditure.
  4. The local copper cable network of BSNL which is spread through out the country has to be given on rent for the use of private operators to provide their broad band internet services to their customers.
  5. BSNL has to form its own subsidiary company for the installation and maintenance of its towers and it can be disinvested.
  6. BSNL has vacant land of total 25 lakh square meters in the seven metropolitan cities. A subsidiary real estate company be formed by BSNL, with a private real estate company as partner, for developing these vacant sites for real estate business.


     

  7. BSNL Board directors be appointed on contract basis for a 3 years period. The CMD post be divided into two posts—Chairman, Managing Director separately, and an independent person capable of resisting political pressures be appointed as Chairman.


     

All these recommendations are aimed at managing BSNL like a Private Company instead of managing it on the lines of Public Sector Company, and further aimed at dividing it into several pieces and then privatise them. The motive behind these recommendations is to intensify the exploitation in the Indian telecom sector being carried out by the combine of the Indian and Foreign big capitalists.

The exploitation in the telecom sector

In 1997, there were 1 crore 53 lakhs telephone subscribers in India. In this, 1 crore 50 lakhs were landline and 3 lakhs were mobile subscribers. But as on 31-1-2010, the total number of telephone subscribers in India was 58 crores(Mobile 54.5 crores, landline 3.5 crores). Thus in the 13 year period between 1997 to 2010, the customers number increased astonishingly, from 1.53 crores to 58 crores. In the number of telephone customers, China is now in first place with 105 crores(74 crores mobile and 31 crores landline) and India is in second place with 58 crores.

But the fruits of this tremendous development in the telecom services sector in India are being exploited by the Indian and Foreign big capitalists due to the pro big capitalist policies of the Government of India. As a result of this,

  1. The foreign Companies manufacturing telecom equipment got spectacular revenue by selling their products
  2. The FDI(Foreign Direct Investment) increased heavily in the Indian Private telecom services Companies.
  3. The private telecom service companies looted the Government exchequer in several scams
  4. The Indian Companies manufacturing telecom equipment became sick
  5. The process of research and development indigenously in the field of developing telecom technology came to a halt.
  6. Exploitation of labour power increased in the telecom sector. There is tremendous expansion of private sector where the trade union rights are absent.
  7. The possibility for threat to national security increased.


 


 

The looting by foreign telecom equipment manufacturing companies

In India there are 54 crores mobile phone customers. The GSM/CDMA equipment required for the capacity to provide mobile service connection to all of them is purchased entirely from foreign telecom equipment manufacturing companies like Nokia, Alcatel, Ericsson, Motorola, Huwaei etc. This is because no Indian company is manufacturing this equipment. Thus for purchasing this 54 crore lines equipment, about Rs 1,62,000 crores might have been paid to these foreign companies, at the rate of approximately Rs 3000/- per line.

Besides this, each of the 54 crores mobile customers is using a mobile phone(handset) which is again manufactured by foreign companies like Nokia, Samsung, Motorola, Sony Ericsson etc. Thus these foreign companies were paid approximately another Rs 1, 62,000 crore for the 54 crores handsets.

Therefore in the last 13 years, India has paid an astronomical sum of Rs 3,24,000 crores to the foreign telecom equipment manufacturers.

Indian Telecom Equipment manufacturing Companies became sick

Neither the then NDA Government lead by Sri Vajpayee nor the present UPA Government lead by Sri Manmohan Singh encouraged the Indian telecom equipment manufacturing Companies in the Public Sector like ITI, HCL etc and the private Indian telecom manufacturers. As a result the Public Sector/Private Sector Indian manufacturers failed to manufacture the equipments required for the mobile services. As a result there were no orders or nominal orders to ITI, HCL etc and they became sick. It is a tragedy that the tremendous development in the mobile services failed to develop the Indian industry manufacturing the telecom equipment.

Threat to the national security

Since the entire equipment required for the expansion of the mobile telecom services network is purchased from foreign equipment manufacturers, it is possible for the foreign companies to install spyware enabling other countries to snoop into Indian telecom networks. Besides, the private telecom services companies like Airtel, Vodafone etc have handed over the planning, installation and maintenance and operations of their telecom network to foreign equipment vendors like Nokia, Ericsson, Motorola, Huwaaei etc and restricted their own activity to branding and marketing. They have thus made these foreign equipment manufacturing companies as their strategic partners. They are doing this for the purpose of getting immediate and higher profits. But this system of foreign companies playing key role in the manufacturing and operation of telecom network has increased the scope for danger to the security of the country since in critical times like war etc., our telecom network can be silenced or snooped.

Increase of FDI in telecom services sector

The NDA Government has proposed for increasing the limit of FDI(Foreign Direct Investment) in telecom sector from 49% to 74% and the UPA Government accepted and implemented it. As a result, in several telecom services companies, FDI share became major and Indian share became minor. In Vodafone, FDI as per the revised liberal calculations is 67%. In Uninor the FDI is 74%, in Bharti Airtel 48% and in Tata Teleservices 26%. Thus a significant portion of the revenue and profit in telecom services sector is being reaped by the foreign direct investors. Besides, such handing over of the majority stake in the telecom services companies is not good for the security of the country.

Looting of the Government treasury by the Private Telecom Operators

The private telecom operators have quoted tender amounts in large scale, in thousands of crores of rupees, to acquire license for starting telecom services. After thus quoting higher amounts of fees and acquiring the license, they have pressurized the Government to reduce their license fees. The then NDA Government has favored them in the year 1999 by exempting the private operators from paying the license fees quoted by them and allowing them to pay a small portion of the revenue earned by them as the license fee. As a result the private telecom operators got a benefit of about Rs 50000 crores and the Government treasury lost the same amount. This looting of the Government treasury by the Private operators in collaboration with the Government was known famously as the "telecom scam".

In 2008/2009, the UPA Government sold 2G spectrum along with All India license for running telecom services, to the new applicants(private companies) at the rate of Rs 1651 crores which was the rate prevailing in the year 2001. Immediately after thus getting the license , some of these new private operators sold considerable shares( to the extent of 40 to 60%) to foreign partners at a rate 5 to 6 times higher than what they have paid to the Government. This means, the Private Operators got spectrum at the rate lower than 5 to 6 times of the market rate and as a result the Government lost about Rs 60000 crores. This scam was known as "spectrum scam".

Thus the private telecom operators have illegally got a profit of about Rs 1,00,000 crores by such scams.

Increasing exploitation of labour power

In 1986 when the DoT alone was operating the telecom services, there were about 6 lakhs employees in it. But to day in BSNL, which is operating telecom services earlier operated by DoT, there are 3 lakh employees only. Thus there was a decrease of 3 lakh jobs. It can not be said that these 3 lakh jobs were transferred to private telecom companies operating telecom services. The total number of jobs in all the private telecom services companies may be less than 1,00,000 since in Airtel, the largest Private Operator, there are 25000 employees only. Most of these 1 lakh jobs in the private telecomcompanies are low paid contract jobs only. Moreover there are no trade union rights in these private companies. Thus in the last 24 years, although the telecom subscribers number increased from less than one crore to 58 crores, the number of regular, unionized jobs decreased from 6 lakhs to 3 lakhs. In the place of the 3 lakhs jobs thus abolished, about 1 lakh low paid contract jobs without any trade union rights were created.

Similarly in the telecom equipment manufacturing companies like ITI, HCL etc the jobs are very much reduced since they are having no considerable orders for equipment production. In the factories of foreign telecom equipment manufacturing companies like Nokia, Ericsson etc established recently at Sriperumbudur and some other places, the workers are paid a paltry salary of Rs 3000 to Rs 5000 as per the reports and there are no trade union rights for those workers.

Thus although the productivity and the services in telecom sector increased tremendously, it was at the cost of increased exploitation of the labour power since it has not resulted in any increase in the number of regular, unionized jobs. The share of labour power in the value created in the telecom sector is thus decreasing whereas the share of the capital is increasing.

Indigenous R&D in telecom technology stalled

In the telecom sector, the technology is ever improving and evolving. Therefore to develop the telecom technology, research and development(R&D) is required and it cannot be there unless the Government encourages it through appropriate policy measures. In the past C-DoT was established as a Public Sector unit for R&D in telecom sector. It was able to develop the telephone exchange technology (C-DoT exchanges) required for making the telephone exchange equipment suitable for the Indian environment and it was helpful in developing our landline network. But due to the liberalization policies, entry of private telecom services companies, and tremendous increase in the mobile services network, this process of technological research and development was stalled. The technology required for manufacturing the GSM/CDMA equipment required for mobile services network is not available in our country. It has to be received on transfer from the foreign countries and then developed based on further research in our country. But the private telecom services companies are not interested in this. They restricted themselves to the managed services system as per which the network required for the development and expansion of their mobile services will be planned, installed, maintained and operated by the foreign GSM/CDMA equipment manufacturers like Nokia, Ericsson, Huwaaei etc., inorder to minimize the cost on employees and the capital expenditure. These private telecom services companies are doing the work of branding and marketing. They are not at all operating the telecom network on their own. As a result, they continued to import the technology, instead of developing it indigenously. This resulted in total halt to the indigenous R&D in telecom technology.

But in China, the experience is different from this. There three PSUs(China Telecom, China Mobile, and China Unicom are running the telecom services. There are no private telecom services companies. Hence the Government is having the control in giving the orders for the telecom equipment required for the expansion of telecom network. Orders were given to the Chinese companies manufacturing the telecom equipment. These indigenous manufacturing companies were allowed to acquire telecom technology from the foreign equipment manufacturers by taking them as their junior partners with the condition that they have to transfer their technology to the Chinese partners. After thus acquiring the technology, the Chinese Companies have further developed it indigenously through their research and development wings. Thus the Chinese telecom equipment manufacturing companies were able to manufacture GSM/CDMA equipment of high quality and today the Chinese equipment manufacturing Companies like Huwei, ZTE etc are competing with Nokia, Ericsson etc., in supplying the equipment to several other countries including India.

The importance of BSNL as a PSU

BSNL is the PSU extending telecom services to rural and backward areas even by incurring losses, keeping the development of the society in view. It is installing and maintaining the telecom services network for the defence forces keeping national security in view. It is placing orders to ITI and other indigenous telecom equipment manufacturing companies for telecom equipment to the extent of 30% of its requirement, thus trying to encourage the Indian telecom equipment manufacturing industry. It is playing the main role in extending broadband internet services to rural ares, thereby bringing information and data to the reach of the people in the villages. Unlike private operators, it is maintaining and operating its own telecom network and thus helping in the national security. It is employing 3 lakh employees, and thus one of the largest employment providers in the country, and providing social justice by implementing SC/ST/OBC reservations. In the situation when the private mobile services operators have been exploiting the customers by unjustified high call rates, BSNL entered the mobile services in the year 2002 with low tariff rates for mobile services and thus helped in lowering the call rates. It is paying thousands of crores of rupees as license fees, spectrum charges, Corporate tax, dividend etc to the Government exchequer and thus contributing to the development of the nation. As per the balance sheet of the year 2008-2009, BSNL has reserve and surplus funds of Rs 76,133 crores and cash & bank balance of Rs 38,134 crores. It has the telecom network spread every where in the country(except Mumbai and Delhi). Thus it is playing an important role in the economy of the country. The book value of BSNL is Rs 4,00,000 crores whereas its market value will be ten times more than the book value.

The attack on BSNL

The unholy combination of Indian and Foreign big capitalists wants to make BSNL impotent and then to handover its assets at dead cheap rates in the name of disinvestment and privatization.It is pressurizing the Government of India to fulfil this demand. The previous NDA Government and the present UPA Government are acting accordingly. The Access Deficit Charge of Rs 5000 crore paid by the private telecom companies to BSNL to compensate for the losses incurred by it for providing land lines in rural areas , was reduced and finally abolished by the Government, in the name of TRAI recommendations. BSNL was in the first place until 2006 regarding the number of customers and the revenue received from services. Even though it was allowed to start mobile services very lately compared to private operators, in the year 2002 only, it reached second position after Airtel, in the mobile services market. The Private Companies were unable to bear this achievement of BSNL and conspired against BSNL. They have brought pressure on the Government to put hurdles in the development of BSNL and also they have gone to Courts against BSNL on flimsy grounds with a view to stall its development. Because of the Court cases filed by the Private Companies and the flimsy objections raised by the Government, the tender for procurement of 4 crore lines GSM equipment for enhancing BSNL's capacity to give mobile connections to new customers was put in cold storage, so that BSNL's market share will not grow. After the one day strike on 11-7-2007 by all the non-executives and executives in BSNL against this conspiracy, orders were issued to purchase 2 xcrore lines GSM equipment instead of 4 crore lines. Again, against the recent tender floated by BSNL for procuring 9 crore lines GSM equipment, a private Company(Nokia) went to Court to delay it and the Government and its agencies have raised some flimsy objections against it and BSNL was unable to go ahead. The Government allowed private telecom service companies to procure their GSM equipment from Chinese Company Huwaei, even for their operations in the Circles having borders with Pakistan, China etc. But it objected BSNL for the same and not allowed it to procure the equipment from the Chinese Company Huwaei for the border circles. Finally the Sam Pitroda Committee recommended for cancelling this tender and BSNL board agreed for it and cancelled it. Thus BSNL was systematically denied in various wrong ways by the Private Operators and the Government from procuring the required equipment for increasing its capacity to provide services to the new customers. As a result of this conspiracy, BSNL was unable to increase its market share and it came down to 4 th place in the mobile services market.

Due to the declining land line services market and due to these conspiracies which prevented BSNL from going ahead in the mobile services market and due to the failure of the management in marketing and sales, the revenue and profit of BSNL declined severely. The profit of BSNL was Rs 10,000 crore in 2004-05 and it declined considerably and came down to Rs 574 crores in 2008-09. It is likely that there will be a loss of around Rs 2000 crores for BSNL in his financial year 2009-10. Since the wage revision arrears due for the executives and non-executives from 1-1-2007 are included in the accounts of the BSNL for the year 2009-10, this loss is there. But this arrear payment will not be there next year, since it is a one time payment. Hence this situation of loss is temporary, for this year. Since there will be no such arrear payment, there will not be loss in the year 2010-11 for BSNL. It may post some marginal profit. Therefore there is no necessity to write off BSNL since this loss is only temporary.

Sam Pitroda Committee recommendations ill conceived

The Sam Pitroda Committee recommended removal of one lakh employees out of the 3 lakh employees in BSNL through VRS/transfer to other organizations. It was said that the Airtel with a customer base of 12 crores is having only 25000 employees, whereas BSNL with a customer base of 9 crores is having 3 lakhs employees, which is very high and hence removal of one lakh employees is justified. But it is to be noted that BSNL is having 80% of the land line customers with it and its landline network is spread vastly through out the country. On the otherhand Airtel has landlines customers nominally and its main business is mobile services. Landline services require large number of staff compared to mobile network. Besides, BSNL is maintaining and operating its own network whereas the Airtel has outsourced the planning, installation, maintenance and operations of its network to its equipment providers, and its work is branding and marketing only. Hence there can not be any comparison between BSNL and Airtel regarding the requirement of staff. Hence there is no surplus staff in BSNL. Besides, every year ten thousand employees in BSNL are retiring. Therefore there is no necessity for VRS in BSNL. The existing staff can be best utilized for marketing and sales and other works in the changed circumstances by proper motivation and training. BSNL can achieve good results by proper utilization of the existing staff. Moreover, as a PSU, it is the responsibility of BSNL to provide employment. Hence it is not proper to ask a PSU to work like a Private Company for reducing the employment opportunities.

There is no force in the proposal that by disinvesting 30% of the shares in BSNL, private partnership will be there in BSNL and it will help in increasing its efficient functioning. In MTNL where there was disinvestment upto 46%, there was no improvement in efficiency on account of such disinvestment. The proposal that the amount accruing to BSNL by selling 30% of its shares can be utilized to meet the expenditure for VRS and for development of BSNL is bogus. Not a single paisa of the amount got by selling 30% shares will be received by BSNL. The entire amount will be paid to the Government exchequer. The Government has given unnecessary tax concessions to the extent of five lakh crores rupees in the last 3 years to the big capitalists to save and to increase their profits and as a result there was heavy deficit in the Government budget. To fillup this deficit to a certain extent the Government decided to sell the shares in the PSUs through disinvestment. Hence the aim of the disinvestment is to fill the deficit in the Coffers of the Government and not for developing the PSUs. Moreover the valuable shares of PSUs will be sold at throw away prices to the big capitalists(Indian and foreign) so that they will reap windfall profits in the name of disinvestment.

Prescribing BSNL to handover the installation, maintenance and operations of its network to foreign telecom equipment manufacturing companies in the name of "managed services" will increase the possibility of threat to the national security and hence not proper.

BSNL has total 25 lakhs square meters vacant sites in the 7 metropolitan cities. Sam Pitroda Committee recommended BSNL to create a subsidiary real estate company with private partnership for developing these vacant sites. This is a plan to handover the valuable vacant sites of BSNL to the real estate mafia.

Therefore the aim of Sam Pitroda Committee's recommendations is not to save BSNL, but to fragment it and to privatise it.

United struggle of non-executives and executives

The executives and non-executives in BSNL are opposing the recommendations of the Sam Pitroda Committee since the aim of those recommendations is to devour BSNL, instead of saving it. They are demanding immediate procurement of the 9 crore lines GSM equipment required for expansion of BSNL mobile services. They demand that the BSNL should be freed from political interference. To achieve these demands, they have gone on massive dharnas in all state and district head quarters throughout the country on 26-3-2010. This is a welcome development. In the past the BSNL executives and non-executives fought together and defeated the disinvestment proposals twice. The support of left parties, progressive forces and other trade unions helped in this. It is certain that now also this struggle will be successful.

Alternative

As detailed above, the united struggles of executives and non-executives are successful for the time being. But the attacks by the combination of Indian and Foreign big capitalists is continuing on BSNL with the support of the Government. Therefore it is necessary to further strengthen the struggle for defeating these wrong policies totally. For this purpose, it is necessary for the executives and non-executives in BSNL to formulate a pro-people telecom policy as an alternative to the pro-capitalist telecom policy of the Government, place it before the people, and rally the support of all the forces favouring such alternate policy. This alternate telecom policy should have the following ingredients in it:

  1. There should be self reliance in telecom sector. For this purpose,
    1. The indigenous telecom equipment manufacturing PSUs like ITI, HCL, the Telecom Factories in BSNL and the indigenous telecom equipment manufacturing companies in private sector should be encouraged. It should be made mandatory for the telecom services companies in Public Sector(BSNL, MTNL) and in private sector(Airtel, Vodafone etc) to place orders to these indigenous manufacturing companies for procuring the equipment required for expanding their networks.
    2. To acquire the latest telecom technology, these indigenous manufacturing companies may be allowed to have the foreign telecom equipment manufacturing companies having the latest technology as their junior partners with the condition that the technology should be transferred to the Indian partner. The Indian manufacturing companies can develop this acquired technology by doing further research and development on it. Such indigenous research and development in telecom technology should be encouraged by the Government.
    3. All the telecom service companies should be directed to maintain their telecom network by themselves without outsourcing it to the foreign equipment manufacturing companies. This is required in the interest of the security of the country.
  2. The private telecom equipment manufacturing companies and the private telecom service companies should implement trade union rights and avoid the illegal exploitation of workers. The wages of the workers in these private companies should be decided through collective bargaining.
  3. The role of FDI(Foreign Direct Investment) in telecom sector should be restricted keeping in view the interest of the country.
  4. There should be no disinvestment/outsourcing/unbundling in PSUs like BSNL/MTNL etc.
  5. BSNL should be exempted from payment of license fees since it is providing landline services to the rural areas as well as in urban areas incurring losses. The land line network should be recognized by the Government as a valuable asset of the nation. For the present it is unavoidable for the landline network to incur losses. But once the broadband services are extended in large scale utilizing the landlines, these losses will not be there and profit will be there. Till then BSNL and MTNL should be exempted from paying the license fees.
  6. By adopting the public-public participation system, all the Central/State Government Departments/undertakings should be directed to meet their telecom services requirements from BSNL/MTNL only, and not from private telecom service companies.
  7. The managements of BSNL and MTNL should not behave bureaucratically and they should not acquire the fraudulent culture of the private sector. They should act as the management of the Public Sector which is meant for serving the people of the country, with a social outlook. Therefore the management should work for extending modern telecom services including broad band internet services to all sections of the people of the country, including those in rural and backward areas at cheaper rates. At the same time they should compete with the private telecom service companies in extending the modern high end telecom technology and services to the Corporates and high income subscribers in order to earn profits. They should encourage the employees to work effectively for both these purposes. The ITS officers acting as managers of BSNL and MTNL at all levels, should get themselves absorbed in BSNL/MTNL and take full responsibility for developing BSNL/MTNL.
  8. The private telecom companies, whether in production sector or in service sector, should implement SC/ST/OBC reservations in employment and contribute for social justice.

In order to go to the people for asking support to such an alternate policy and in order to gather the support of the people for their struggles in strengthening BSNL with a huge increase in the number of subscribers, it is necessary for the BSNL employees to serve the customers with more dedication and to bring a radical change in the work culture suitable for the competition with the private companies.

The struggle for such an alternative polcy will only save and develop BSNL and telecom sector. We have to defeat the attack against BSNL by making the indefinite strike from 20-4-2010 a grand success. We have to formulate the alternative telecom policy and fight for making the Government accept it. The support of the people and the left, democratic and progressive forces is necessary for this. We should try to get such a broad based support to our struggle for the alternate policy.

----------P.Asokababu

AGS, BSNLEU

Dated 5-4-2010