CASE STUDY ON BSNL

1. CASE STUDY OF
CENTRALISATION EFFECT ON
BSNL

Prepared by
Hawthorne group: b vinay, s
swaroop,t.narasimha

2. INTRODUCTION TO BSNL
The foundation of Telecom Network in India was laid by the
British sometime in 19th century. The history of BSNL is linked
with the beginning of Telecom in India. In 19th century and for
almost entire 20th century, the Telecom in India was operated
as a Government of India wing. Earlier it was part of erstwhile
Post & Telegraph Department (P&T).

In 1975 the Department of Telecom (DoT) was separated from
P&T. DoT was responsible for running of Telecom services in
entire country until 1985 when Mahanagar Telephone Nigam
Limited (MTNL) was carved out of DoT to run the telecom
services of Delhi and Mumbai.

It is a well known fact that BSNL was carved out of Department
of Telecom to provide level playing field to private telecoms.
Subsequently in 1990s the telecom sector was opened up by
the Government for Private Investment, therefore it became
necessary to separate the Government's policy wing from
Operations wing.

The Government of India corporatized the operations wing of
DoT on October 01, 2000 and named it as Bharat Sanchar
Nigam Limited (BSNL).BSNL operates as a public sector.
It is the largest provider of fixed telephony,
largest broadband services provider with more than 60%
Market share, and fifth largest mobile telephony provider in
India. However, in recent years the company's revenues
and market share have plummeted into heavy losses due
to intense competition in the Indian telecommunications
sector.

3. BSNL is India's oldest and largest communication service
provider (CSP). It had a customer base of 12 crores as of June
2015. It has footprints throughout India except for the
metropolitan cities of Mumbai and New Delhi, which are
managed by Mahanagar Telephone Nigam (MTNL).
On 20 March 2009 BSNL advertised the launch of blackcherry services
across its Telecom circles in India. The corporation has also launched
3G services in select cities across the country. Presently, BSNL and
MTNL are the only players to provide 3G services, as the Government of
India has completed auction of 3G services for private players. BSNL
shall get 3G bandwidth at lowest bidder prices of Rs 185 billion, which
includes Rs 101.86 billion for 3G and Rs 83.13 billion for BWA.
As of December 2011, many other private operators have started rolling
out their 3rd Generation (aka 3G) services alongside and are enjoying
some success in their campaigns to get market share. While BSNL still
maintains its connectivity standard and expands to many more areas
including rural areas with their 3G services. Also the network
infrastructure has been upgraded from to provide 3.6 Mbit/s to 7.2
MBits/sec. It is enjoying a slow but somewhat steady success in gaining
market share in this regard.
The introduction of MNP (Mobile Number Portability) which is an service
that lets the consumer change wireless service providers while retaining
their actual mobile number, BSNL has seen many customers opting for
this service to move away from the services to other operators. Despite
this as the Indian Wireless market grows BSNL still has a loyal base of
subscribers and many more subscribers being added to it every day.
This provides customer services for 95 million as of June 2011.
BSNL announced the discontinuation of its telegram services from 15
July 2013, after 160 years in service. It was opened to the public in
February 1855; in 2010 it was upgraded to a web-based messaging
system in 2010, through 182 telegraph offices across India.

4.  BSNL is divided into a number of administrative units termed
as telecom circles, metro districts, project circles and
specialized units. It has 24 telecom circles, 2 metro districts, 6
project circles, 4 maintenance regions, 5 telecom factories, 3
training institutions and 4 specialized telecom units.

 Government of india owns 100% share holding in BSNL. REFER TO
FOLLOWING RTI REPORT WEB ADDRESS
http://www.maharashtra.bsnl.co.in/ssa/pune/INFO%20MANUAL%20PUNE.pdf

It works under Ministry of Tele – communications where
there will be UNION MINISTER, department of Tele-
communications & CMD FOR BSNL.

CASH COW PERIOD:
 Under HONOURABLE UNION MINISTER
RAM VILAS PASWAN BSNL STARTED ITS OPERATIONS
and when BSNL was carved out of the telecom
department in 2000, it was a crown jewel. By 2004, it
had become the second largest telecom firm, after
Airtel. In 2005, it had added more subscribers than
Airtel, and, by mid-2006, it was within striking distance
of the top slot.
 BSNL EARNED PROFITS OF RS.2000cr IN
FY2002-03 AND RS.3000cr IN 2003 -04 AND
RS.3600cr IN 2004 -05.

HOW BSNL BECAME A PATIENT

 In the year 2004, MR.DAYANIDI MARAN took
oath as union telecom minister of India .

5.  Under him BSNL has done good performance
for 11/2 year and about to take the giant
position.
 Observing the situations in 2006 he slowly
started influencing the government officials
of BSNL to favour his BROTHER’S business of
SUN NETWORK .
 THEN HE STARTED MIS -UTILISING HIS
POWER AS TELECOM MINISTER.
 He mis-utilized 323 telephone connections
from BSNL during his tenure as the Telecom
minister, and caused the BSNL a huge loss.
 It is alleged that he extended these
connections from his house in Boat Club,
Adyar, to his brother's Sun TV channel office
located in Anna Arivalayam in Teynampet.
 This case was exposed by S.G urunatam by
several articles published in Indian express.
Then CBI filed FIR on him and chief G.M of
BSNL. He miss utilised 323 BSNL telephone
lines for nearly 5100000 calls.
 It caused a great loss to BSNL about
rs.1500cr.
 IT IS THE ROUTE CAUSE FOR BSNL& PROFITS
FOR 2006-07 HAD DECREASED TO
RS.1200CR.
 AFTER EXPOSURE OF THIS MARAN RESI GNED
IN THE MONTH OF NOVEMBER 2006.

6. WIMAX TECHNOLOGY FOR BSNL:

BSNL proposed to introduce WIMAX
TECHNOLOGY in the year 2006. But it was
kept under the desk by the telecom ministry.
WIMAX TECH is the fourth(4
th
) generation
services that BSNL wanted to start to
increase its customer base with efficient
billing system & to roll out broadband
services with more access, to introduce 3g
services before the introduction by private
telecom operators.

BSNL was the first
telecom company to pro pose WIMAX
services in india, which was denied by
telecom minister A.RAJA.

SITUATION TO VENTILATOR :

 Following the resign of Maran.
A.raja from DMK party took oath as telecom
minister in 2007.

 Under his time again BSNL proposed to
upgrade its technology and improving
infrastructure to attract more money and
market by using WIMAX technology.

7. The proposal was accepted
partially by the telecom minister and approved to
Invite tenders by BSNL .

 In 2007 BSNL invited tenders for bidding.
 There were 5 bidders, Motorola, siemens,
nokia, ZTE Ericson. ERICSSON AND NOKIA
GOT THE BID IN THE % OF 60 AND40.
 As the price quoted by Ericson is too high at
$108per line and with intervention of maran
Ericson reduced it to $91 per line.
 But Nokia which quoted $177 per line has
not agreed to this they were out of this
contract and project was CANCELLED by
BSNL on suggestions from DOT .

By this time private
telecom operators introduced the wireless
technology and gone past BSNL to defeat
it. Private operators have improved their
technology and infra to provide 3g services
and fast services and BSNL was lagging
behind.
BSNL STARTED LOOSING ITS
MARKET SHARE AS THERE IS NO IMPROVE
IN TECHNOLOGY AND FAST SERVICES.

8. DILEMMA:

After ericsson and nokia came
out of the project BSNL again invited bidders
for tenders in 2009. In its EOI (Expressions of
Interest) invitation for bids to offer services based
on the 802.16e mobile wimax standard in 16 ‘Licence
Service Areas’ across India, BSNL says each
interested bidder must have a turnover of at least
100 Rs crore ($21m) for the last two financial years.
The tender document, which is available from 12
June 2009, will only be issued after a submission of
proof on turnover.
The deadline for the tender submission is 4
th
August
2009.

BSNL had to make an embarrassing cancellation of
its original WiMAX tender, as exclusively reported
by telecoms.com, as the bidding process became
embroiled in allegations of non-transparency. Some
of the bidding companies in the original tender were
believed to be fronts for individuals with close
connections to the government.
BSNL RAPIDLY LOST ITS
MARKET SHARE IN TELECOM MARKET AND SO IT
ALSO CANNOT CONTROL ITS OPERATING
EXPENSES.SO call tariffs became burden to the
users.

9. FROM THE ABOV E INFORMATION
WE CAN KNOW THAT HOW BSNL LOST ITS
MARKET SHARE FROM 2012-2014 AROUND ITS
BROADBAND SERVICES AND MOBILE
CONNECTIONS.

 Likewise from 2007 to 2010 13 tenders were
cancelled. Those were the peak days mobile
extension of 3g services are happening.
 13 tenders were cancelled by the department
of Tele-communications (DOT) with the
influence of telecom minister.

10.  As far as BSNL has reserved some spectrum
for the usage of WIMAX technology. In 2007-
08only profit was rs.450cr.

 In 2010, BSNL cancelled
a 93-million line tender worth 35,000 Crores
allegating that the bidding process lacked
competition. Also, the home ministry had
objected to its plans to procure equipment
from a Chinese company.
This was when all major private telecom
companies operated eq uipment from Chinese
manufacturers. Though the government
allowed it after a few months, the
procurement programme was greatly
delayed. In 2010, then 2g spectrum scam
busted out and it was revealed that spectrum
reserved for wimax tech was also sold for
lesser price to star communications A friend
of A.raja.
 By this time market share came down to 15%
from 21.5%. After that Supreme Court
cancelled all the licenses. After these fresh
bids were invited by BSNL in 2011. After
long delays Wimax technology was started by
BSNL in October 2013.at this time market
share decreased to 10 .9%. IN 2014 TO 8.6%.
 While the Central Bureau of Investigation (CBI) has
filed charge sheets in the BSNL scam, company
insiders are of the view that the investigative agency
also needs to probe how BSNL was forced to accept
the inferior 2.4 gigahertz spectrum, which can be

11. used only to operate outdated and isolated WiMAX
services.
 CBI is looking into irregularities in the process of
awarding Bharat Sanchar Nigam Ltd's WiMAX
(worldwide interoperability for microwave access)
franchise to private firms.
 Sources said CBI was unlikely to widen its probe to
uncover how the government reportedly forced BSNL
to induct and use obsolete WiMAX airwaves.
 This, sources alleged, was to favour manufacturers of
WiMAX, who could not find buyers for their
equipment, which were left idle after it was
introduced in 2001.
 While the private telecom players negotiated with the
government for the more efficient 2.3 gigahertz band
of broadband wireless access (BWA) spectrum in
May 2010, BSNL was offered 2.4 gigahertz, a poor
quality band on which it was told to operate outdated
and isolated WiMAX services.
 BSNL has already returned the commercially
unviable Wimax spectrum in 17 of the total 22 circles.
Moreover, its plans to rollout WiMAX- based services
through a franchisee model could not take-off.
 However, BSNL has not been compensated by the
Centre so far, although it had paid over Rs 8,500
Crores for the WiMAX spectrum.
 BSNL is the only Indian telecom firm that had
committed to theW Imax technology, which has
become obsolete, for its BWA services. All other
winners of these airwaves had decided to opt for
upcoming LTE (long term evolution) platform for
their 4G services.

12.  CBI is now investigating former telecom minister A.
Raja's role in favouring private firms and offering
them franchise for BSNL's WiMAX. It has already
initiated action against former BSNL chairman and
managing director Kuldeep Goyal and other top
officials in this regard.
 A top BSNL official said while all the major private
telecom companies that won the BWA auction in May
2010 are betting big on the rollout of fourth-
generation (4G) technology, BSNL has been left high
and dry.

 Sources said that being a public sector firm BSNL
was forced to take the redundant 2.4 gigahertz of
spectrum, which is not clear and interferes with other
bands. It does not even effectively work out for
WiMAX services.
 "It is not commercially viable. The band offered to
BSNL may not be suitable and technically does not
match with the equipment available. Wimax lobbies
may have been responsible for pushing it to BSNL. It
will be the only company on WiMAX platform and
will face isolation from interoperability and roaming
arrangements," a top telecom industry official said.

 BSNL's own investigations had revealed that five of
the six shortlisted companies for WiMAX services
were acting as fronts for some individuals and shared
the same corporate details. BSNL was forced to scrap
the tender under pressure from its labour unions.

13.  After long delays wimax technology was started by
bsnl in october 2013.at this time market share
decreased to 10.9%.Now BSNL is in situation of
intensive care unit as its losses climbed to rs.7506cr
for the FY2014-15.
 Even it introduced wimax technology users are
limited as it became obsolete technology AS OF NOW
IT IS 4G TRENDS.
CONCLUSION:
BSNL faced many problems with its
centralisation power on it. When BSNL proposed to
use wimax technology but it was delayed for long time
by cancelling the tenders for the usage of this wimax
technology.
If BSNL would have been introduced
wimax technology before its competitors’ in telecom
sector, it could have gained superb market share by
providing faster data services, improved billing
system, more access to rural areas.
BSNL missed its opportunity to become
a large giant in the telecom industry which gives huge
profits to the organisation. The customer base is
hugely reduced as bsnl is now expanding its 3g
operations around india.