1. The BSNL posted a loss of Rs 1823 crores for the year 2009-10 and a further loss of Rs 6384 crores for the year 2010-11. A campaign is organised by the Government and the media that the reason for these losses is the large number of employees (2,76,000) in BSNL and the solution is to retrench one lakh employees in the name of VRS. But in fact, it is the Government that imposed these losses on the BSNL and VRS to one lakh employees will increase these losses further and the employees taking VRS also will be put to loss.
2. As on 30-6-2011, the BSNL and MTNL have provided 57.21 percent and 12.01 percent of the total internet connections in the Country. Thus these two PSUs together provided 69.31 per cent of the total internet connections, including broadband. They have provided these connections utilising their landline network. The landline network is a loss making business, but without it would not have been possible to provide the internet connections on such a large scale. Since the landline business is not a profit making business , the Private Telecom Operators are not investing on it in a big way. That is why the leading private telecom operator Airtel provided only 7.12 per cent of the internet connections. Besides, the BSNL is providing landline services in rural areas which necessarily will incur losses. It is doing this as a social obligation. In such case there is full justification for compensating the losses to BSNL and MTNL on account of the landline network. In fact, the New Telecom Policy 1999 mentioned “In order to ensure level playing field between different service providers in similar situations, licence fee would be payable by DoT also. However, as DoT is the national service provider having immense rural and social obligations, the Government will reimburse full licence fee to the DoT.” After the announcement of this new telecom policy 1999 and as per this policy, the telecom services under DoT were transferred to the newly constituted PSU, the BSNL on 1-10-2000. Therefore all these immense rural and social obligations are transferred to BSNL from DoT. Accordingly the BSNL is eligible for the reimbursement of the full licence fee.
BSNL is facing a loss of more than Rs 10000 crores on the landline network every year. Earlier, in the year 2004-05, BSNL was reimbursed the licence fee of Rs 2200 crores and the other telecom operators have paid ADC (Access Deficit Charge collected at a certain rate on each long distance call that originated on the network of other operator and terminated on the landline of BSNL to compensate for the losses on landline) of Rs 5000 crores as compensation for the losses incurred on landline network.
Against the assurance in the New Telecom Policy, the reimbursement of licence fee was gradually reduced and finally stopped from 1-4-2006. The ADC was also gradually reduced and then totally stopped since 2008, in the name of the recommendations of TRAI. This was actually due to the demand raised by the Indo-US CEO Forum in 2006 at the time of the visit of the Prime Minister Sri Manmohan Singh to USA to discuss the Indo-US strategic relations issue with the then USA President George Bush. The demand of this forum was for level playing field between the PSUs and Private Companies in the Indian telecom services sector, thereby meaning that the ADC and licence fee available to BSNL should be stopped since it was not available to private operators. But it is to be noted that although the same TRAI confirmed that the 3G intra circle roaming agreements of the private operators are illegal, they are being allowed (See the details at para 3 below). If this compensation of Rs 7200 crores is still available to BSNL, it would not have been in losses for the years 2009-10(loss Rs 1823 crores) and 2010-11(loss Rs 6384 crores.)
3. An amount of Rs 7500 crores was collected by the Government from BSNL during 2005 to 2008 in the name of repayment of loan. Interest also was collected on this amount, at the rate of 14.5 per cent per annum, with effect from 1-4-2005. But the D.O.No. F.2(50)-B(SD)/2010 dated 26-5-2011 from the Finance Minister Sri Pranab Mukherjee to the Communications Minister Sri Kapil Sibal established the fact that this amount of Rs 7500 crore was never paid by the Government to BSNL as loan and it was only a notional loan. It was also a fact that the Department of Telecom has no loan from the Government at the time of formation of BSNL. Therefore imposing this notional loan of Rs 7500 crores on BSNL without actually giving to it and then collecting back Rs 7500 crores with interest is most unjustified. It should be given back to BSNL along with interest.
4. While BSNL purchased 3G spectrum for all the circles where it has been providing the 3G services, the private operators Airtel, Vodafone and Idea have been providing 3G services even in the circles where they have not purchased 3G spectrum from the Governemnt. They have done this by coming to a mutual agreement called “intra circle roaming agreement”. By this agreement among them, if any one of them has not secured 3G spectrum in a circle, it will provide 3G services in that circle also, by sharing the 3G spectrum of the other partner in the agreement that has 3G spectrum in that circle. As per some estimates, the amount thus they avoided paying to the Government for the circles where they are providing 3G services without securing the 3G spectrum is around Rs 20000 crores. The TRAI, DoT and the Law Ministry have concluded that these intra circle roaming agreements were illegal and against the rules and licence conditions.
By utilising these illegal intra circle roaming agreements, Airtel which secured 3G spectrum for 13 circles only is providing 3G services in 20 circles, the Vodafone which secured 3G spectrum for 9 circles only, is providing the services in 20 circles, and the Idea which secured the 3G spectrum for 11 circles, is providing the services in 19 circles. On the other hand, the BSNL purchased the 3G spectrum from the Government for all the Circles other than Delhi and Mumbai(where it is not there) and providing the 3G services in those circles. Thus the Airtel, Vodafone and Idea got illegal and undue benefit by resorting to the illegal intra circle 3G roaming agreements. The DoT wanted to issue notice to these 3 private operators for terminating their 3G intracircle roaming agreements. But they met the Communications Minister and the Prime Minister on 30-11-2011 and pressurised them to allow them to continue with their intra circle roaming agreements. Finally, as per the report in The Economic Times dated 10/12/2011, the DoT is now planning to allow this, levying an additional spectrum charge on them as a share in their revenue and it may be around Rs 700 crores per year from all of them. Thus instead of collecting a lump sum amount of about Rs 20000 crores for all the circles where they have been providing 3G services without owning the 3G spectrum, these private operators are being let off with the payment of a small amount every year. On the other hand the PSUs BSNL and MTNL which have purchased the 3G spectrum for all the circles wherever they have been providing the 3G services were discriminated since they were compelled to pay for the 3G spectrum for all the circles where they have been providing the 3G services. The Government collected a huge sum of Rs 10186 crores from BSNL for the 3G spectrum, excluding Delhi and Mumbai where it has no presence. It is to be noted that China allocated 3G spectrum to its PSU telecom operators China Telecom, China Unicom and China Mobile in January 2009 without any licence fee and with only a small usage fee ( see web page www.marbridgeconsulting.com/marbridge daily/2009-01-20/article/23145/china_allocates_3g_spectrum). But although the DoT requested for refunding this amount to BSNL, the Finance Ministry rejected it.
5. While the private operators were allowed to procure GSM equipment for providing mobile services from the Chinese manufacturers like Huwaei and ZTE including in the border states, the BSNL was prevented from doing so for the border states for some period on the plea of national security. This was the reply given in the Rajyasabha, by Sri Sachin Pilot, Minister of State for Communications to the question raised by Smt Brinda karat M.P. Thus the BSNL lost a business opportunity for the sake of national security. But it was not compensated for this loss imposed on it in the interest of national security.
6. In the name of reducing the losses to BSNL, the Government compelled the BSNL management to send a proposal for retrenching one lakh employees in BSNL in the name of VRS. But the exgratia expenditure to be born by BSNL to give VRS for one lakh employees is Rs 11,000 crores and as per the DPE guidelines, BSNL has to get this amount by taking bank loan, since it has no funds. In case one lakh employees are given VRS, as per the DoT order dated 15-6-2006, the BSNL will be compelled to pay around Rs 2000 crores per annum to DoT towards their pension expenditure. The servicing of Rs 11000 crores loan and the additional Rs 2000 crore pension expenditure to be born per year will put more burden on BSNL, rather than reducing its burden. Instead, the employees should be utilised for better service to the customers and for marketing of BSNL’s products. The employees given VRS also will lose since the monthly pension and the interest on the exgratia they may get every month if it is deposited in bank will be lower than their monthly salary if they are in service. Thus VRS will result in more burden on the Company and loss to the employee taking VRS.
7. As per the report in “The Hindu Business Line” dated 5-11-2011, the private operators Airtel, Reliance, Vodafone, Idea etc have failed to implement the roll out obligations for expansion of mobile telecom services in eueal areas covering 2.5 lakh villages. The project was supported by the USO fund. Against a target of commissioning mobile services on 21,607 towers, these operators have commissioned the services only on 15309 towers even after repeated extension by the USO fund administrator. The biggest defaulters are the Anil Dhirubhai Ambani Group Companies Reliance Communications and Reliance Telecom which have fallen short by 65% and 47% of their respective targets. RCom and Reliance Telecom have approached the DoT in 2009 seeking to exit from 4537 and 751 mobile sites respectively on the grounds of un viability. The failure rate in commissioning the services on the towers is 65% in case of Reliance Communications, 47% in case of Reliance Telecom, 27% in case of Aircel, 19% in case of Airtel, 14% in case of Vodafone and 8.5% in case of Idea. But in case of BSNL, it is only 4%. Similarly the private operators never implemented the licence condition of rolling out their landline network in rural areas. Instead of cancelling their licence for such continuous violations, they were let off with a small fine.Thus while the Private Operators are stalling the development of telecom services in rural and backward areas, only the BSNL is helping and doing its level best in extending the telecom services in the loss making rural and backward areas. But the BSNL is discriminated and denied proper compensation for carrying out social obligations.
8. The only way to make BSNL viable and to take it back on the path of having profits, is to compel the Government to change its anti-BSNL and pro-private sector policies and compensate BSNL for the losses incurred by it on social obligations like providing services in loss making rural areas, in maintaining the loss making landline network for providing internet services as well as a valuable a national asset and by refunding the amount collected from BSNL in the name of notional loan which was never paid to BSNL and by refunding the amount collected towards 3G spectrum and by dropping unproductive loss making VRS scheme.
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