BSNL sees red as govt mulls change of operator

Bharat Sanchar Nigam Ltd (BSNL) has slammed the finance ministry's recommendations that all government departments, ministries and officials be permitted to use the services of all private telecom operators.

By recommending this, the government is adopting double standards vis-à-vis the state-owned service provider, BSNL has said.

In a strongly worded letter to the government, BSNL Chairman and Managing Director AK Sinha said, "The denial of preferred status of (official) communications service provider in respect of all government agencies will in effect lead to the weakening of BSNL. Survival and growth of BSNL are extremely important to promote competition and protect customer interests in the country, which are the larger objectives of the government."

Expressing grave concern over the move, Sinha said government agencies that engaged private operators, initially at low costs, would eventually end up "paying a much higher cost at a later stage in the absence of BSNL as a competitor".

BSNL, however, had been always transparent in its pricing and costs were well known to the government, the letter said. Additionally, the letter said, "revenue from government institutions formed a substantial part of the PSU's total earnings".

Sinha said, "While on one hand BSNL has been used as a tool for implementing socially desirable but commercially non-feasible initiatives by the government, on the other, it has been denied the status of preferred service provider for the government sector."

"It is expected to compete with other private operators, on an unequal playing field, where procurement as well as operations are absolutely unencumbered by any obligations other than commercial interests," he added.

While highlighting that BSNL was a 100 per cent government-owned company, Sinha also pointed out that "all private telecom operators followed a policy of using their own telecom services for all communication across their various units".

Further, Sinha said, it was mandatory for BSNL to source a part of its supplies from domestic manufacturers to promote industrial competition. But the government had "put no obligation on PSUs or domestic manufacturers of telecom equipment to engage BSNL services," he pointed out.

The letter has cited numerous examples to justify its claims. It said the government had directed BSNL to source 30 per cent of its equipment from Indian Telephone Industries and make an advance 75 per cent payment for the procurement.

It also lists the company's activities in rural and commercially non-remunerative areas.

"In the year of 2004-05, Rs 2,269 crore were invested in rural telephony, of which Rs 1,415 crore were invested in the Northeast states, Jammu and Kashmir, and Uttaranchal," the letter added.