Wrecking of BSNL to promote private telecom operators


By Sanjeewani Jain, Vice president, Lok Raj Sangathan

This is the third in series of articles about spurious justifications given to justify privatisation


India’s telecom sector is the second largest in the world with 118 crore mobile subscribers. It is also second in the world for downloading mobile applications. It has 75 crore internet subscribers and it generates an annual revenue of Rs. 2,70,000 crores. This explains the interest of Indian and foreign monopolies in the Indian Telecom Sector.

BSNL played a vital role in taking telecom services to the remotest parts of the country. It was a profit-making public sector enterprise from its inception to 2008. After that it has been systematically wrecked to promote telecom operators. Now telecom monopolies are eye ing its valuable infrastructure built with public money and its vast precious land assets.

Role of the successive governments vis-à-vis BSNL

  • The telecom policy of 1994 to 1999 clearly pushed the monopoly over telecom from government to the private players. After that, all successive governments have worked for the wrecking of BSNL to promote private players.
  • Private players were allowed to enter the telecom sector in 1995 and to start mobile services in 1997. BSNL, though formed in 2000, was not allowed to enter the mobile market till 2002.
  • BSNL employees fought in the Delhi High Court which then ordered the Government of India to provide license to BSNL and MTNL for mobile operations. Their entry into this sector forced private companies to lower their tariffs from Rs. 16 per call to Rs. 1 per call.
  • BSNL was given the responsibility by the government to provide telecom services to rural and remote parts of the country. At the time of its formation in 2000, the Union Cabinet had declared that all losses incurred by BSNL on account of providing services to remote areas would be borne by the government. However, after 2006, many of the subsidies given by the government were withdrawn.
  • The formation of BSNL also reduced the government liability of salary payment to 3.5 lakh workers, who were transferred to BSNL.
  • The World Bank and IMF wanted the Indian government to be out of Telecom business by 2007. It is a matter of pride that BSNL exists today, even in 2021. The government had planned to wind it up but because of the strong opposition from BSNL officers and employees, it could not do that.
  • Over the years, the funds provided to BSNL were substantially cut. From the day BSNL was formed there was no budgetary support at all. Rs. 7,500 crores were given at the time of the formation of BSNL and the government had said it won’t take back this money. But, Rs.14,000 crore was taken back from BSNL ignoring the promise.
  • Interconnect Usage Charge (IUC: the cost paid by one mobile telecom operator to another when its customers make outgoing mobile calls to the other operator’s customers), were reduced drastically by the government to benefit private operators.
  • From 2000 to 2008, BSNL realised a total profit of Rs.43,976 crores rupees. However, the government started interfering in its working from the financial year 2009 and turned it into a loss-making company. It started cancelling tenders worth crores that had already been finalised. It stopped compensating BSNL for rural operations. The company incurs a loss of Rs. 4000 crores per year to maintain its 18000 exchanges in rural areas.
  • When business was booming and other operators were adding millions of connections per month, BSNL was starved of the resources needed for growth. It was adversely affected by government policies, political interference, non-allotment of 4G spectrum, non-appointment of Board of Directors and bad management decisions. BSNL with a revenue of Rs.30,000 crores did not have a Director of Finance from 2013 to 2020!
  • Till 2013, BSNL was prevented by the government from using Chinese manufactured components in its services in the border states, whereas there was no such restriction on private operators.
  • BSNL has not got a single paise from the Government for the last 19 years for operations. All expenditure is met from its internal resources. About 65000 employees and their families, as well as 2.5 lakh pensioners depend on BSNL. It also gives jobs to 1.5 lakh people indirectly.
  • In September 2016, Reliance Jio launched its services. The government, through the Telecom Regulatory Authority of India (TRAI), allowed R-Jio to provide free services for almost 6 months (contrary to its own regulation of allowing free service for only 3 months). It turned a blind eye to the predatory pricing by R-Jio. Before this, BSNL had recorded operational profit for 3 consecutive years in 2014-15, 2015-16 and also in 2016-17.
  • BSNL was not allowed by the government to participate in the 4G auction, in the interest of the private operators and to justify the closure of BSNL in the name of its “inability to provide competitive services”.
  • 4G technology was introduced by various private players but BSNL was denied this technology by the then ruling Congress government.
  • While all other operators were allowed to start 4G services with foreign equipment in 2014 and all of them upgraded by 2017, the Make in India policy was implemented only for BSNL, which could not start 4G operations, because there was no Indian supplier! Now, the trials for 5G by Jio have already been started while roadblocks continue to be placed in the way of the 4G service by BSNL
  • Though the BSNL had the least liability of about Rs. 20,000 crores, the government did not allow it to take loans from public sector banks to expand its operations. Private telecom operators were allowed to take bank loans of more than 1 lakh crore each, even though they had huge debts to the banks, totalling more than 4.25 lakhs crores (Vodafone Idea had 1.18 lakh crores, Airtel had 1.08 lakh crores and R-Jio had 1.12 lakh crores).
  • Instead of supporting BSNL, the Government is supporting JIO. JIO connections have been given to all officers from Secretary downwards, of the North Block and South Block in New Delhi.

Assets of BSNL

  • The value of the assets is second only to those of the Indian Railways.
  • As per the Government rates in 2014, for the land assets in A, B and C1 class cities, the land assets alone were worth Rs. 1.15 lakh crores. Including the land assets in smaller towns and villages, the total land asset value is more than Rs. 3 lakh crores as per the market value.
  • It has the maximum Optical Fibre network of more than 7.5 lakh route km. with connectivity in every corner of the country. In comparison, OFC network of Reliance Jio was 3.25 lakh route km, Airtel is 2.5 lakh route km and Vodafone Idea is 1.6 lakh route km (2019 figures)
  • It has more than 66,000 towers, ranking third among all telecom operators in the number of towers.
  • BSNL maintains 17,000 to 18,000 telephone exchanges in rural and remote areas.
  • BSNL has been meeting all its expenses entirely from the earnings through its services. It has been paying the salaries (more than Rs. 1.5 lakh crore) of the 3.25 lakh government employees of the DoT, who were absorbed in BSNL at the time of its formation in October 2000.
  • BSNL has also paid thousands of crores of rupees as spectrum charges, license fee, USO fund contribution, income tax, service tax, GST, pension contribution etc.

Importance of BSNL for our country and people

  • In rural and remote areas of the country, border areas and high-security zones, BSNL is the only reliable service provider. The optical fibre connectivity of BSNL passes through even the farthest corners of India.
  • Almost all security forces, banks, post offices, National Mission projects etc. use BSNL services exclusively. It plays a vital role in providing uninterrupted connectivity to the armed forces.
  • The entire Bharatnet network and the Digital India project are completely dependent on BSNL. The NFS (Network for Spectrum) project of the Indian armed forces is provided by BSNL.
  • BSNL has an office in every nook and corner of India to physically service customers. People can talk to BSNL workers face to face whereas with private players they cannot.
  • During natural calamities and other emergency situations, government agencies depend totally on BSNL, whose employees provide services in very difficult situations. Private telecom operators do not operate in these situations as these are not profitable.
  • BSNL also acts as a tariff regulator in the telecom industry. Were it not for the presence of BSNL, the private telecom operators would form their own cartel and greatly raise the charges on incoming and outgoing calls, as used to be case before the entry of BSNL in this sector.
  • Compared to the rest of the world data is cheaper in India because of BSNL. Every year BSNL is fighting to maintain the services to the people and fighting to survive. Without BSNL, cartels would control the rate and make communication services unaffordable for common people. What is happening with trains will happen with telecom too.



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