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BSNL has the plans,
the money, and the infrastructure, but its government-department
hangover could hurt. It has already cost its cellular venture dear-a
delay of three years. Thus, while its licence envisaged it as the
third operator, its sloth-engendered, in part, by a desire to make
the equipment procurement process transparent enough to satisfy
any government agency empowered to ask uncomfortable questions-has
made sure it will be the fourth in most circles.
LESSONS FROM THE
OTHERS
BSNL isn't the first telecom monopoly to
be corporatised. Nor will it be the first to be privatised.
Here's how some of the others have fared. |
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AT&T
BSNL brass need only look at AT&T circa 1984 to realise
how much better off they are. The monolith was broken into
seven Baby Bells; worse, none could enter a new business without
the permission of the man overseeing the carve-up, US District
Court Judge (DC), Harold Greene. Why, it was only in 1996
that AT&T actually managed to secure permission to enter
the wireless business
BT
BSNL can learn what not to do by simply looking at the experience
of British Telecom, which was neither broken up nor barred
from any business although its monopoly was dismantled around
the same time as AT&T's. BT aggressively expanded its
wireless business across Europe and Japan. It also overpaid
for third-generation (3g) licences. The result: it is overweighed
with debt. And on hometurf, its cellular business plays second
fiddle to vodafone
CHINA MOBILE
For its next step BSNL can acquire a tip or two from China
Mobile. Despite extensive government regulation, it has aggressively
expanded its cellular telephony business on the GSM platform
to cover 56 per cent of all cellular subscribers in mainland
China. That's been enough to rank it sixth in BusinessWeek's
latest ranking of the top 100 infotech companies in the world.
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Even today, no one in BSNL is willing to put
a firm date to the cellular services launch; August is a tentative
one. Says Bharti Enterprises CEO Sunil Mittal, "In mobile services,
I expect BSNL to be a small operator as compared to the private
sector."
The company also appears indecisive in its choice
of technology. Singh claims BSNL will use GSM everywhere except
in rural areas where it makes economic sense to use CDMA (when subscribers
are scattered across a wider geographical area, the latter is a
more cost-effective technology). Only, BSNL has rolled out its CDMA
service in 15 cities, Hyderabad, Patna, Ranchi, Gurgaon, Bangalore,
Ernakulam, Indore, Nagpur, Nasik, Pune, Chandigarh, Amritsar, Kanpur,
Allahabad, and Kolkata. "They could end up wastefully duplicating
infrastructure," says Pandey of Tata Teleservices.
The not-for-business-alone attitude has an
economic cost attached to it. BSNL, which has some 90 lakh village
telephones, loses Rs 850 a year on each, a loss of Rs 765 crore
a year.
"Forty per cent of our rural consumers
only pay the rental, Rs 50 a month," says Khurana with some
amount of pride.
That doesn't cut any ice with the competition.
"BSNL's focus on the social side of telecommunication is clearly
worth saluting," says Virat Bhatia, Managing Director, AT&T
India. "If they could exhibit the same vigour and business-savvy
to their commercial objectives, they would be unbeatable."
MURPHY & BSNL
Things could go horribly wrong for BSNL |
» It
cushion of high revenues from long distance is gone
» It has
be bear the burden of unviable rural telephony
» It resources
could dissipate further if local call charges don't rise soon
» Its GSM
mobile licence, granted free in 1999 is not operational; the
delay is costing it dear.
» Govt interference,
from equipment purchases to service launches, is an irritant
» Two separate
mobile networks could prove wasteful |
The Ace Up BSNL's Sleeve
Unbeatable BSNL could still be-if it learns
to leverage its biggest advantage, access to the consumer. Long
distance telephony companies share revenue with the local telco
that originates and terminates their calls. Indeed, analysts reckon
that this is one reason BSNL bounced back from the DLD tariff cuts-it
was both the DLD company as well as the local telco. Doing a repeat
with ILD, as the company hopes to do once it acquires a licence
would give it an edge. "BSNL has access to some 34 million-practically
all-telecom subscribers in the country," admits Bhatia. "This
is the most coveted possession of a telco." Merely leveraging
access to the customer won't be enough; BSNL needs to take a leaf
out of the strategy of private telcos and lobby with the regulator
for a rise in local tariffs. "Tariff rebalancing is a must
to compensate for the loss of long distance revenue," explains
Bharti's Mittal. Singh is aware of this, but, instead of actively
seeking it, seems content to leave it to Telecom Regulatory Authority
of India to do the needful.
Corporatisation has already resulted in some
gains: BSNL's operating cost today is down to 43-48 per cent of
revenue. "The Railways spends 99 per cent," points out
Anita Soni, Deputy Director-General (Finance). The company has also
managed to reduce the workforce-telephone line ratio from 76:1,000
to 12:1,000. Singh has empowered a marketing committee to take spot
decisions and the company plans to spend Rs 200 crore on marketing
this year. "BSNL has responded well in terms of market offerings
on the price and products side," says Pandey, whose company
has been competing with BSNL's fixed-line service in Andhra since
1999. Now, if it can only remember that it is a for-profit company
and not a welfare-minded government department.
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