Tuesday, May 7, 2013
IMP Information on Committee on Public Undertaking 24 th Report-inf. by Ashok Hindocha M -94262 54999
www.bsnlnewsbyashokhindocha.blogspot.com M -94262 54999
CPU NO. 957
TWENTY FOURTH REPORT
COMMITTEE ON PUBLIC UNDERTAKINGS
(2012-2013)
(FIFTEENTH LOK SABHA)
BHARAT SANCHAR NIGAM LIMITED
MINISTRY OF COMMUNICATION AND INFORMATION TECHNOLOGY
(DEPARTMENT OF TELECOMMUNICATIONS)
Presented to Lok Sabha on 30.04.2013
Laid on the Table of Rajya Sabha on 30.04.2013
LOK SABHA SECRETARIAT
NEW DELHI
April 2013 / Vaishakha 1935(S)
242
CONTENTS
COMPOSITION OF THE COMMITTEE (2012-13) (iii)
INTRODUCTION (v)
PART – I
BACKGROUND ANALYSIS
Chapter-I HISTORICAL BACKGROUND 5
Chapter-II FINANCIAL MATTERS
a) Financial Performance 7
b) Financial Support 14
Chapter-III PHYSICAL PERFORMANCE
a) Market Share (In terms of total connections) 17
b) Utilization of capacities 20
c) Delay in Procurement of Equipments 23
d) Shortfall in achievements vis-à-vis MoU Targets 27
e) Rural Telecom Network 31
Chapter-IV PERFORMANCE REVIEW BY DoT 34
Chapter-V HUMAN RESOURCES
a) Manpower Cost 36
b) Skill Set of Employees 38
c) Absorption of Indian Telecom Officers 40
Chapter-VI RESTRUCTURING & REVIVAL
a) Sam Pitroda Committee Report 42
b) Restructuring / Revival Initiative taken by BSNL
c) Disinvestment
44
45
Chapter-VII 3G TECHNOLOGY SPECTRUM ALLOCATION
a) Advance Allocation Of Spectrum to BSNL 48
b) Reimbursement of License Fee 49
c) Availability of 3G Handsets 50
PART - II
OBSERVATIONS / RECOMMENDATIONS OF THE COMMITTEE 51
Appendices
Minutes of the Sittings of the Committee held on 25.8.2010 57
Minutes of the Sittings of the Committee held on 21.09.2010 59
Minutes of the Sittings of the Committee held on 16.11.2012 61
Minutes of the Sittings of the Committee held on 11.12.2012 63
Minutes of the Sittings of the Committee held on 26.4.2013 653
COMPOSITION OF THE
COMMITTEE ON PUBLIC UNDERTAKINGS
(2012-2013)
Shri Jagdambika Pal
Chairman
Members, Lok Sabha
2. Shri Hansaraj Gangaram Ahir
3. Vacant*
4. Shri Bansa Gopal Chowdhury
5. Dr. Mahesh Joshi
6. Shri Shailendra Kumar
7. Dr. (Smt) Botcha Jhansi Lakshmi
8. Shri Vilasrao Baburaoji Muttemwar
9. Shri Adhalrao Shivaji Patil
10. Shri Ponnam Prabhakar
11. Shri Rajendrasinh Rana
12. Shri Nama Nageswara Rao
13. Shri Uday Singh
14. Dr. Prabha Kishor Taviad
15. Shri Bhisma Shankar alias Kushal Tiwari
Members, Rajya Sabha
16. Shri Anil Desai
17. Shri Janardan Dwivedi
18. Shri Naresh Gujral
19. Dr. V. Maitreyan
20. Shri Mukhtar Abbas Naqvi
21. Shri T.M. Selvaganapathi
22. Dr. Janardhan Waghmare
SECRETARIAT
1. Shri A. Louis Martin Joint Secretary
2. Shri M. K. Madhusudhan Additional Director
3. Shri Yogendra Singh Committee Officer
____________________________________________________________________
* Vacancy caused due to passing away of Shri Ambica Banerjee, M.P. on 25 April, 2013.
( iii )4
INTRODUCTION
I, the Chairman, Committee on Public Undertakings (2012-13), having been
authorized by the Committee to submit the Report on their behalf, present this 24th
Report on Bharat Sanchar Nigam Limited (BSNL).
2. The Committee took evidence of the representatives of BSNL on 25th August,
2010 and that of the Ministry of Communication & Information Technology (Department
of Telecommunications) on 21st September, 2010. Thereafter, the Committee took
further evidence of the representatives of BSNL and that of Ministry of Communication
& Information Technology (Department of Telecommunications) on 16th November and
11th December, 2012 respectively.
3. The Committee considered and adopted this Report at their sitting held on 26th
April, 2013.
4. The Committee wish to express their thanks to the representatives of the Bharat
Sanchar Nigam Limited and Ministry of Communication and Information Technology
(Department of Telecommunications) for tendering evidence before them and furnishing
the requisite information to them in connection with the examination of the subject. The
Committee would also like to place on record their appreciation for the assistance
rendered to them by the officials of the Lok Sabha Secretariat attached to the
Committee.
5. For facility of reference and convenience, the observations and
recommendations of the Committee have been printed in bold letters in Part-II of the
Report.
New Delhi: SHRI JAGDAMBIKA PAL
29 April, 2013 Chairman,
09 Vaisakha, 1935 (Saka) Committee on Public Undertakings 5
PART – I
BACKGROUND ANALYSIS
CHAPTER – I
HISTORICAL BACKGROUND
In pursuance of New Telecom Policy 1999, Government of India decided to
corporatize the service provision functions of Department of Telecommunications (DoT).
Consequently, Department of Telecom Services (DTS) and Department of Telecom
Operations (DTO) concerned with providing telecom services in the country and
maintaining the telecom network/telecom factories were separated and carved out of
the Department of Telecommunications as a precursor to Corporatization. On
15.9.2000, Bharat Sanchar Nigam Limited was incorporated with the main objective to
acquire or take over the management, control, operations and maintenance of
communication networks etc. from the DTS and DTO along with all assets and liabilities
including contractual rights and obligations.
1.2 Accordingly, by virtue of an Memorandum of Understanding (MoU) dated
30.9.2000 entered into between the President of India [acting through the Secretary to
the Government of India, Ministry of Communications (Department of
Telecommunications (DOT)) and Bharat Sanchar Nigam Limited, the business of
providing telecom services in the country, maintaining the telecom network/running the
telecom factories were taken over by the Bharat Sanchar Nigam Limited with effect from
1 October 2000, on a going concern basis, at a provisional consideration of Rs. 63000
crore.
1.3 Bharat Sanchar Nigam Limited is engaged in the business of providing all type of
telecom services across the length and breadth of the country, except in the metro
districts of Delhi and Mumbai. Bharat Sanchar Nigam Limited, being the successor /
assignees of the erstwhile Departments of Telecom Services and Telecom Operations
had acquired and taken over the management, control, operations and maintenance of 6
communications network, manufacturing and other facilities of these departments along
with the assets and liabilities including contractual obligations. Thus, BSNL is providing
telecom services, operation, maintaining, upgrading and modernizing the existing
communication systems and networks and also engaged in planning and establishing
the future communication systems and network in the country. BSNL is also actively
engaged in bridging the digital divide by providing rural telephony.7
CHAPTER – II
FINANCIAL MATTERS
(a) FINANCIAL PERFORMANCE
It is observed from the information furnished to the Committee that the BSNL
which had been making huge profits till the year 2004-05, has gradually slided to incur
huge loses as evident from the following figures:
Net profit loss of BSNL year wise (Rs. in crores)
3.2 When asked about the details of financial performance of the Company during
the past five years (2007-08 to 2011-12), the DoT in its written reply stated as under
(Rs. in crores)
Year 2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
2009-
10
2010-
11
2011-
12
Net
Profit/Loss
10183 8940 7806 3009 575 -1823 -6384 -88518
2.3 The service wise breakup of revenue of the Company during the last five years is
as under:
(Rs. in crores)
2.4 While referring to the factors responsible for the precarious financial condition of
BSNL, the Secretary, DoT deposed as under:
“While the entry of the private sector starting from 1994 as per the policy of
Government has caused significant changes in the sector which prior to that was
a Government monopoly. In the recent past, there are two major shifts. First of
all, with the entry of private sector in 1994, the telecom sector which till then was
a purely landline business and for which the DoT and which later became largely
BSNL as far as operations were concerned, was structured to take care of the
landline business. That is how the manpower was recruited and deployed and
kept in position. But because of technology shifts and because of the
Government policy of bringing in the private sector also, but mainly because of
the technology shifts and the mobile being the preferred mode of
telecommunications, from 1994 onwards, there is a steady change in the whole
nature of the sector. The point I am trying to make is that the structure of BSNL,
which was inherited from the erstwhile DoT is largely the structure of a wireline
business. The operations today are to a substantial extent mobile business. So,
they have a legacy of manpower and they also have the legacy of infrastructure,
which is linked to the wire lines business. The result today is, one of the major
problems that the BSNL has is the mismatch between their human resource
position and the rest of the operators in the sector. BSNL today has close to 2.60
lakh employees. In fact, this has been actually coming down. Not so long ago, it
was three lakh. Its expenditure on salaries comes to over 50 per cent of its 9
operational cost, which compares extremely unfavourably with the private sector
where depending on the business model followed, the cost are in single digit
percentages.
..........The second is that on the spectrum, we are currently in a transition
where from a different policy regime which was there in the past, we have now
moved to a market-determined cost for the spectrum and in 2010 the 3G and
BWG auctions were conducted where the Government obtained Rs. 1,06,000
crore from the spectrum charges. In that context, what had happened was
because the Government had a number of programmes which required
connectivity up to the rural areas quickly, the BSNL was actually given the
spectrum both 3G and BWG spectrum more than a year prior to the 2010 auction
and it was given in all the circles in the country with the understanding that the
BSNL will pay at the same rate that is realised through the auction. At that time,
neither the Government nor the BSNL nor anybody else knew what that price
was going to be. After 1 ½ years when the actual auction was conducted in 2010,
it turned out that BSNL and MTNL paid close to Rs. 28,000 crore at one shot and
obviously even for a big company such a huge amount of pay out at one go did
have a very serious impact on their balance-sheet. This has happened in 2010”.
2.5 When asked about the reasons for gradual decline in the profits of BSNL over
the years, the DoT in its written reply indicated the following reasons for the reduction
in Company’s profitability :-
(i) Fixed to Mobile Substitution: Most of the BSNL assets are in landlines
because BSNL has been in the landline business for several decades. This applies to
both physical and human resources. Whereas, assets are already committed and there
is expenditure to maintain these assets, revenue from landline has decreased
drastically.
(ii) Stiff Competition in Mobile Sector: The Mobile telephone market has
become very competitive with all players introducing very aggressive tariff plans and
bringing innovative packages. With reduced Average Revenue Per User (ARPU), the
margins of the operator have been severely impacted. Further, whereas private players
reorient themselves to changing conditions and procure equipment for providing
services rapidly, this is many a time not possible for BSNL, which has to follow
prescribed procedures.
(iii) Manpower Cost: When BSNL was created in 2000, it had 3,97,000 employees
transferred from DoT. So long as its monopoly in landlines and high tariffs in mobile
services continued, it could sustain this large employee base. However, with change in
technology, the requirement of manpower reduced sharply and today, BSNL has a huge
manpower (of 2.58 lakhs employees) compared to its competitors. Its staff cost today
(2011-12) is Rs.13406 crore. The manpower cost of BSNL is around 50% of total 10
revenue as compared to 5-10 percent of private operators. Due to large legacy
manpower, the impact on BSNL profitability has been much higher than that of any
other PSU. BSNL has to maintain these employees on its rolls, being a Government
company.
(iv) Skill set of Employees: BSNL is not only beset with large number of
employees, but the skills of these employees are not suited to present requirements
because the skill set required for rendering services to Mobile customers and
Broadband customers is entirely different than the skill set required for rendering
landline services. BSNL has to bear the expenses of their pay and allowances but their
productivity is low. BSNL is making efforts to retrain and reorient the skills of a section
of these employees, but it would take some time before all of them could become real
asset to the company.
(v) Legacy Systems: BSNL system and processes were designed several years
back to suit the needs of that time, mostly serving the landline customers. Whereas, a
company starting from beginning can jump-start with new and contemporary systems
and processes, for an existing company it takes some time to develop contemporary
systems and processes. And even then some inherent disadvantages continue for quite
sometime. However, BSNL has changed many of its systems and processes and it is in
the processes of bringing about more changes. These are in the areas of marketing and
sales, delivery of service, distribution channels, single point accountability, customer
service management etc.
(vi) Procedures: Being a PSU, BSNL has to follow the prescribed procedures,
rules and regulations issued by various government entities for PSUs, which are more
cumbersome than the procedures followed by private operators. Whereas in a less
competitive environment, this handicap may not make much difference, but in mobile
business, which faces the severest competition, even a slight edge of competitors has
effect on BSNL market share.
(vii) Service in Rural area through landline: Prior to mobile becoming popular,
BSNL has provided landline phones in rural areas as a matter of Government policy.
These landlines were not remunerative even at that time. After mobile came there is
hardly any additional demand, and, in fact, there is reduction and exchange capacities
are utilized much less. BSNL can not close these exchanges but has to maintain them
resulting into additional losses.
(viii) Removal of Concessions: The progressive removal of concessions provided
to BSNL like reimbursement of license fee and spectrum charges paid and withdrawal
of access deficit charge (ADC) to compensate for unviable wireline network has also
impacted BSNL’s financial performance very adversely.
2.6 The Committee observed that in spite of all the abovementioned factors, BSNL
was making huge profits till the year 2004-05. To a query whether the poor performance 11
of the company since 2005-06 is, at least, partly attributable to managerial deficiencies,
BSNL stated in a written reply that the Market dynamics have changed in last 5 to 6
years in telecom market because of the entry of more number of operators, which has
put lot of pressure on Tariff. In order to meet the challenges of competition, BSNL
decided to restructure its set up by creating Business wise Verticals like Mobile, Fixed
Access, Enterprises and New Business. Besides, other reasons for poor performance of
the Company are given below:
i). “BSNL had to pay approx. Rs. 18,000 crore in 2010 towards payment of upfront
spectrum charges for 3G and Broadband Wireless Access(BWA) for Pan India
license. Thus, BSNL did not have any choice for selecting the Circles as per the
flexibility available with private operators.
ii). BSNL has provided services in remote areas like Andaman & Nicobar and
Lakshadweep islands where the cost of bandwidth is much more than the
revenue being earned by BSNL.
iii). Poor customer service because of attitude of legacy manpower.
iv). Traditionally BSNL focused on its core business for providing technical services
and there was no focus on Sales & Marketing.
As for basic telephony is concerned, the subscriber base of BSNL has
declined for last few years due to following main reasons:
a) It is a global trend and can be observed all over the world that with increased
penetration of Mobile Telephony, the subscriber preference has been shifted
from landline to mobile drastically and thus there is a reduction in number of
Landline connection. This has resulted in BSNL also, substitution of basic
telephones by mobile phones.
b) Earlier there was a trend of subscribers having multiple Landline numbers and
now with multiple mobiles with each member of family, there has been a
surrender of extra wire line telephones and their substitution by personal mobile
phones.
In fact, the trend is still continuing for substitution of wireline telephones by
mobile phones and shifting of demand from basic to mobile connections which
provide greater convenience at highly competitive rates. However, measures are
adopted/ being adopted by BSNL to retain and enhance its landline connectivity
by increasing penetration of Broadband.”
2.7 When asked to specify the problems, which were beyond the control of the
Company, and whether these were taken up with the Government and if so with what 12
result, the DoT in a written reply has stated that the following issues were taken up by
BSNL with the Government:-
(a) USO subsidy for Rural Telephony: BSNL took the issue for extension of
support for Rural wirelines in the year 2011. The existing support expired in
July, 2011. Since the support was being given on the recommendations of
TRAI, it was decided to refer the case again to TRAI for further
recommendation in the matter. The case was sent from DoT to TRAI in Sep
2011. TRAI, in May 2012, has recommended a support of Rs. 1500 Crore for
First Year and Rs. 1250 Crore for the Second year. The matter is being taken
up with Telecom Commission and a decision is likely to be taken.
(b) BSNL paid an amount of Rs 8313.80 crore to the Government for BWA
Spectrum. BSNL had sent a proposal to DoT for the return of BWA spectrum
for some of Circles and refund the charges paid for the same. The case is
being examined in DoT.
(c) Excess Manpower: BSNL had taken up the case for offering Voluntary
Retirement Scheme (VRS) to its employees for reduction in Manpower in
consonance with the recommendations of the Pitroda Committee & Board for
Reconstruction of Public Sector Enterprise (BRPSE). This will involve
payment of Rs. 18,000 Crore (approx.) to the optees, numbering one lakh
including DoT’s liability of Rs 7000 crore (approx). The case has been
examined in DoT in consultation with Department of Public Enterprises and
Internal Finance Division of DoT. Initially BSNL had submitted a VR proposal
as per the guidelines for a profit making PSU. This was also discussed and it
was decided in consultation with DPE that BSNL should go with DPE
guidelines in this regard…. Accordingly, several meetings were held between
DoT and BSNL to finalize a concrete proposal. In the last meeting held on
25.10.2012, certain more clarification/information were sought from BSNL,
which are awaited.
2.8 When asked to quantify the constraints faced by BSNL in monetary terms, the
DoT in its reply stated as under:
“The monetary terms in each of the constraints is given below:
(a) Non-viable Rural Wireline connections - Rs. 3200 Crore.
(b) Refund of BWA Spectrum cost for six circles - Rs. 6725 Crore.
(c) Reduction of 1,00,000 excess Manpower through VR scheme - Rs. 18000
Crore.”
2.9 The Committee required whether there is any system in BSNL for performance
measurement - business unit wise / circle wise / state wise. The Company in its written 13
reply stated that there is comprehensive performance measurement mechanism in
BSNL to monitor the performance by the name GPMS (Gross Performance
Measurement System). GPMS scorecard is assigned for each Circle/ SSA/ Business
Verticals at Corporate Office. This covers all the financial, operating and physical
parameters.
2.10 To a query as to what action has been taken by the Company to improve the
less performing business units / circles / States, the DoT has stated that BSNL has
grouped its 26 Operational Circles into 4 Zones i.e. North Zone, South Zone, East Zone,
West Zone. Each Zone is headed by a Functional Director responsible for monitoring of
its revenue. Performance review is being undertaken by DoT and Hon’ble MOC&IT on
regular basis. Detailed analysis of less performing units is being done to identify the
weak areas and further advise is being given to prepare the action plan to improve the
performance. Further, BSNL has been signing Memorandum of Understanding (MoU)
with Department of Telecommunications (DoT) on yearly basis in accordance with the
MoU guidelines of the Department of Public Enterprises. The review of the same is
held on periodic basis. Further, various interactions on overall performance of BSNL,
quality of service offered by it, suggestions for improving the services/financial
performance etc. also happen on periodic basis at various levels including at the MOC
& IT level in Department of Telecommunications. During these meetings, the various
issues and problems faced by BSNL are being discussed and prospective corrective
measures are suggested. As an outcome of one of the review meetings, BSNL has
been directed to prepare and follow up the following innovative business proposals for
revenue generation:
(i) Utilization of Land and Buildings for Call Centres/BPO/Software Park.
(ii) Monetizing of Towers.
(iii) Utilization of Telecom Factory Infrastructure for Revenue Generation.
(iv) Broadband Connectivity to Schools.
(v) Establishing Wi-Fi network with the help of Partners.
(vi) Leasing out of CDMA/EVDO, and
(vii) Mobile Virtual Network Operator (MVNO) for 3G.14
2.11 DoT has informed the Committee that the following corrective measures have
been taken by BSNL to arrest its sliding performance:-
“(a) Sales & Marketing set up has been strengthened by having exclusive
channel management team consisting of 4500 exclusive sales
representatives.
(b) BSNL has focused on customer care services by installing exclusive call
centres for GSM services (14) and Wireline/Broadband (11).
(c) Monetizing the huge assets of land and building, towers and bandwidth.
(d) Special Focus up on improvement of the quality of network.
(e) Special Focus upon IT set up. Enterprise Resource Planning (ERP)
system is being installed as part of this focus.
(f) Internet data centre has been opened to create new revenue
opportunities.
(g) 45 top revenue earning telecom districts have been identified and their
performance is regularly being monitored at the highest level.
(h) Migration to Next Generation Network: During this Five Year Plan (2012-
17), BSNL has planned to make the entire wire line customer base
network IP enabled. Next Generation Network equipment based on the
latest architecture are planned to be deployed gradually to replace the
entire Circuit Switched equipments/ Digital Telephone Exchanges.”
2.12 On the issue of monetizing the huge assets of land and building, towers etc, the
Committee observed that it is not a good idea if the Company is plainly selling out its
real estate to be able to fund its requirement. In this connection, Secretary, DoT, during
the evidence on 11 December, 2012, was asked to clarify the stand of Government.
While replying to the query, the Secretary deposed as under:-
......”we did not intend and we have not asked or allowed BSNL to dispose their
assets. It is only to utilise idle assets. For example, if there is a building that is
lying idle, then either use it or rent it and not sell it or if there is a land lying
vacant, then do something with it and not sell it. There is no intention to dispose
or sell any of the assets. It is only to make productive use of non-productive
assets”.
(b) FINANCIAL SUPPORT
2.13 When asked about the details of financial support being extended by the
Government of India to BSNL since its inception, DoT in it reply submitted as under:
“Reimbursement of License Fee:
In accordance with the decisions taken by the Cabinet on 27.09.2000,
Government was providing reimbursement of License Fee and Spectrum 15
Charges to the Company from its inception to ensure that the viability of BSNL is
not impaired on account of services provided by BSNL, which are uneconomical
but socially desirable. The reimbursement was done fully for the first three years
i.e. from 2001-02 to 2003-04, 2/3rd for the year 2004-05 and 1/3rd for the year
2005-06. No reimbursement on this account is being done since 2006-07.
Support for Economically unviable Wireline operations through ADC (Access
Deficit Charge):
With effect from 1.4.2002, a levy of 5% Adjusted Gross Revenue (AGR)
was imposed on all Access telecom service providers for meeting Universal
Service Obligations. Proceeds of receipts on account of this levy are transferred
to Universal Service Obligation Fund (USOF) through budgetary allocation.
Office of Administrator USOF was created to meet the requirement of
connectivity in rural, remote and commercially unviable areas.
Access Deficit Charge (ADC) regime was put in place by Telecom
Regulatory Authority of India (TRAI) to assist in sustainability of fixed line
operations in competitive environment for below cost services. ADC was started
from 1st May, 2003 for giving sufficient time to fixed line operators for rebalancing
the tariffs in the transition period. ADC was instituted as a depleting regime to
be phased out in 3 to 5 years. Review of ADC was done annually. TRAI has
phased out the ADC on domestic calls w.e.f. 1.4.2008 and on international
incoming calls w.e.f. 1.10.2008. The phasing out of ADC by TRAI was
accompanied with the simultaneous support to BSNL’s rural wireline network
through Universal Service Obligation Fund (USOF) as subsidy.
Support for Economically unviable Wireline operations in lieu of ADC:
The phasing out of ADC by TRAI was accompanied with the simultaneous
support to BSNL’s rural wireline network through USOF as subsidy. USOF is
providing subsidy to BSNL for the operational sustainability of the rural wirelines
installed prior to 01.04.2002 at the rate of Rs.2000 crore per annum for a period
of three years from 18th July 2008. Subsidy support of Rs. 6000 crore has been
provided to BSNL under this scheme. The scheme has expired on 17.02.2011.
For further continuation of this financial support, BSNL took up the issue with
DoT / TRAI. TRAI, on 14th May, 2012 has recommended that the support to M/s
BSNL should be continued for two years for sustenance of rural wire-line
connections, installed before 1.4.2002 w.e.f. 18.7.2011.The amount of support
may be Rs. 1500 crore for the first year and Rs.1250 crore for the second year.
In case any amount has already been disbursed to M/s BSNL pursuant to the
interim recommendations of TRAI dated 5.3.2012, the same may be adjusted
from the support for the first year. 16
2.14 As regard to the decisions taken by the DoT on the abovestated
recommendations of TRAI, the Secretary DoT while deposing before the Committee on
11 December, 2012 stated as under
“.......just this morning we had a meeting of the Telecom Commission where a
clearance was accorded for providing Rs. 1,500 crores for one year to the BSNL
as financial support for maintaining the rural wireline infrastructure. In the past,
over the years, if you see from the year 2002, in the form of ADC, the BSNL has
been given almost Rs. 19,000 crores by way of support and today another Rs.
1,500 crores, that means nearly Rs. 20,000 crores for such uneconomic
schemes and investments, which are nevertheless important from a national
perspective”. 17
CHAPTER – III
PHYSICAL PERFORMANCE
The physical performance of the Company during the last five years is given as
under:
(a) MARKET SHARE (IN TERMS OF TOTAL CONNECTION)
3.1 BSNL has witnessed significant decline in its market shares in respect of both
the wireline and the wireless segments. The market share of the Company in the
wireless segment has significantly declined from 18.66% in 31.03.2007 to 10.99% in
30.09.2012. During the same period, its market share in wireline segment has also
declined from 82.75% to 69.73%. As per the information furnished by the Company,
the percentage of market share of BSNL vis-à-vis private operators in the wireless and
wireline segments during the last seven years is as follows:
Year Market share in Wireline (%age) Market share in Wireless (%age)
BSNL Private operators BSNL Private operators
As on 31.03.2007 82.75 8.13 18.66 79.56
As on 31.03.2008 80.05 10.61 15.64 83.00
As on 31.03.2009 77.42 13.31 13.32 85.53
As on 31.03.2010 75.34 15.24 11.88 87.24
As on 31.03.2011 72.64 17.4 11.32 88.01
As on 31.03.2012 69.88 19.37 10.71 88.66
As on 31.09.2012 69.73 20.16 10.99 88.43
3.2 While explaining the Government’s view vis a vis the decline market share of
BSNL against the backdrop of stiff competition from private sector, the Secretary, DoT
deposed as under18
“Even though the private sector has come in and today the share of BSNL is
barely 11 per cent of the market, the view in the Government is that the BSNL is
a very important organisation, it has a strategic importance for the Government
and the nation and it is not to be measured purely in terms of its market share of
11 per cent and so it is not very significant. There are a number of reasons why
it is felt an organisation like BSNL being in the public sector and being a vibrant
organisation is important and some of these related to areas like national
security and therefore these cannot be measured in purely monetary terms”.
3.3 Elaborating the reasons for the downslide in market share of BSNL, DoT in a
written reply submitted as follows:-
“(A). Reasons for declining market share in Mobile Services:
i) BSNL has not been able to augment capacity of its mobile network in all the
Zones mainly because of cancellation of two tenders since 2008.
(ii) New operators who got licensees came out with very aggressive tariff plans
and schemes to attract new customers.
(iii) There was an overall trend of keeping multiple SIMs particularly in urban
areas.
(iv) The sales and marketing network of private operators was better than BSNL.
(v) With the overall increase in total connections, the percentage of market
share for each operator has come down as per the statistics given below
Operator wise & Year wise %age market share in Wireless Telephone
S.N
o
Name of
Operator
31.03.0
7
31.03.0
8
31.03.0
9
31.03.1
0
31.03.1
1
31.03.1
2
30.09.1
2
1 BSNL 18.66 15.64 13.32 11.88 11.32 10.71 10.99
2 Bharti Airtel 22.37 23.77 24.00 21.84 19.99 19.70 20.51
3 Reliance
Telecom
17.24 17.43 18.46 17.53 16.72 16.63 14.87
4 Vodaphone
Essar
10.42 16.92 17.57 17.26 16.58 16.35 16.84
5 Tata Indicom 9.65 9.33 8.97 11.28 10.98 8.88 8.64
6 Idea 8.44 9.21 9.94 10.92 11.03 12.25 12.74
7 Aircel 5.45 4.07 4.72 6.31 6.76 6.80 7.35
8 MTNL 1.77 1.35 1.14 0.87 0.68 0.64 0.58
9 Others 5.99 2.27 1.86 2.11 5.95 8.03 7.4819
(B) Reasons for declining market share in WLL:
The declining market share of WLL was mainly due to following reasons.
(i) There is a preference of customers for GSM technology and because of
increased coverage of GSM network by all the operators, the demand for
WLL connections which is based on CDMA technology is going down.
(ii) BSNL had made WLL network to provide a umbrella coverage for
supplementing the landline network. However, due to preference of
customers for GSM technology over fixed line, demand for WLL connections
has gone down.
(iii) Availability of WLL handsets is poor as compared to GSM handsets. This
also has led to reduced demand for WLL.
In view of the above, BSNL has taken a strategic decision not to further
invest in WLL network augmentation and new strategy is being worked out in the
light of the provisions in National Telecom Policy - 2012 where in sharing of
spectrum is being proposed.”
3.4 As regards Landline services, DoT has stated that the main reasons for decline
in the market share were rapid expansion of mobile services and manifold increase in
mobile connections, which provided greater convenience and cheaper calls and
consequent shifting of traffic to more convenient mobile phones. However, BSNL has
stated that it is making all out efforts to retain landline customers and increase the utility
by providing several Value Added Services such as broadband services, IPTV services,
Video phones and Video Conferencing services etc. Efforts are being made by the
Company for modernization of landline network like induction of new IP Based NGN
(Next Generation Network) switches, inductions of customer care and billing platform,
provisioning of new services at affordable prices, availability of latest CLIP phones,
introduction of various attractive tariff plans & improved marketing strategies, rigorous
monitoring of Quality of Service parameters as defined by TRAI etc. Efforts are being
made to upgrade the external plants and extend connectivity to new upcoming colonies
to provide landline telephones on demand on all areas
3.5 DoT has stated that broadband service is the only service whose market share is
continuously increasing since its inception 2005 as is evident from the following table:
As on BSNL Market Share (%)
31-03-2010 61.4420
3.6 Also, the coverage of the broadband services of Company has been increasing.
Details in this regard are as follows.
3.7 On being asked whether any specific strategy has been evolved/proposed to be
evolved to reverse the trend in declining market share, the DoT in a written reply stated
that BSNL has taken the following steps to reverse the trend in declining market share:
(i) New tender has been finalized to augment the capacity and POs have
been placed in all Circles of North and South Zone.
(ii) Sales & Marketing network has been strengthened and 4500 exclusive
channel management team in BSNL are monitoring franchisee network
consisting of more than one lakh retailers.
(iii) Various steps have been taken to improve the quality of service
particularly for ensuring uptime of the network.
(iv) Optimization of the network is being carried out vigorously.
(v) Steps have been taken to improve customer care by installing 14 call
centres.
(vi) Bundling of devices have been done and agreements have been finalized
for bundling of data cards, tablets and handsets with various vendors.
(b) UTILIZATION OF CAPACITIES
3.7 It is observed from the information furnished to the Committee that there has
been gross under utilisation of equipped capacity by BSNL. The percentage utilization
of equipped capacity as on 30.09.2009 is given below:
Sl.
No.
Name of Service Unit Equipped
Capacity
No. of
Customers
Percentage of
underutilization
1. Landline Lakh lines 460.20 284.47 38.19
2. WLL Lakh lines 80.84 53.53 33.78
31-03-2011 63.11
31-03-2012 64.61
Total Covered
District HQ 632 627
Block HQ 6428 6242
Cities 4629 4417
Village 601625 16920121
3. Mobile Lakh lines 504.63 534.04 -
4. Broadband Lakh lines 69.53 43.06 38.07
5. Internet Lakh lines 49.69 38.62 22.28
3.8 The utilization of equipped capacities by BSNL as on 30.09.2012 is as under :-
Item Capacity as on
30.09.2012
(in lakh Lines)
Utilization as on
30.09.2012
( in Lakh Lines)
% utilization % under
utilization
Wireline 405.65 213.63 52.66 47.34%
WLL 86.70 31.27 36.07 63.93%
Mobile 755.31 965.07 127.77 -
Broadband 98.38 95.80 97.38 02.62%
3.9 When asked to spell out why BSNL could not succeed in ensuring full utilization
of existing capacity, the Company attributed the following reasons for under utilization :-
A) Reasons for underutilization of Wireline Capacity
(i) Rapid expansion of mobile services and manifold increase in mobile
connections, which provide greater convenience at highly competitive rates,
(ii) Surrender of extra wire line telephone where multiple telephones existed in
same house/ office premises and their substitution by personal mobile phones
(iii) Service interruption due to heavy damages done to underground cables
owing to different developmental activities undertaken by public utility service
agencies and other private agencies.
B) Reasons for underutilization of Wireless in Local Loop (WLL) Capacity
(i) There is a preference of customers for Global System for Mobile
communication (GSM)( technology and because of increased coverage of
GSM network by all the operators, the demand for WLL connections which is
based on Code Division Multiple Access (CDMA) technology is going down.
(ii) BSNL had made WLL network to provide a umbrella coverage for
supplementing the landline network. However, due to preference of
customers for GSM technology over fixed line, demand for WLL connections
has gone down.
(iii) Availability of WLL handsets is poor as compared to GSM handsets. This
also has led to reduced demand for WLL.”
3.10 To a query as to how soon BSNL would reach full utilisation of capacity, it was
stated that BSNL making all out efforts to retain wire line customers and increase their
utility. Following steps have been taken in this direction.22
(i) Several Value Added Services including broadband services, IPTV services, Video
phones and Video Conferencing services etc are being provided.
(ii) All out efforts are being made for modernization of landline network like induction of
new IP Based NGN (Next Generation Network) switches, induction of converged
customer care and billing platform, provisioning of new services at affordable
prices, making available of latest Calling Line Identification Presentation (CLIP)
phones.
(iii) Various attractive tariff plans & improved marketing strategies are being introduced.
Rigorous monitoring of Quality of Service parameters is being done as defined by
TRAI etc.
(iv) Steps have been taken for re-deployment of Remote Service Units (RSUs) in
developing areas and decommissioning the spare capacity in order to save the
OPEX in AMC, power etc. Further, NGN capacity are being planned based on the
subscriber base instead of capacity.
3.11 When asked about the potential for sharing of infrastructure and how much has
been achieved in this regard in physical and financial terms, the DoT in its replies stated
that Passive Infrastructure Sharing offers great business potentials and opportunities for
any company like BSNL having large number of tower infrastructures spread all across
the country. BSNL has been sharing spare capacities available on its passive
infrastructure (Tower) sites for last 4 years and BSNL has also been able to register a
steady progress in its achievements every year since inception of tower sharing in
BSNL. The impacts of various other external factors/developments in mobile sector
(like-Intra Circle Roaming, Sharing/trading minutes, Radiation issues, sharing of Active
Infra) on tower sharing business are yet to be seen through. However, BSNL has been
making all out efforts to acquire maximum possible business by sharing spare available
capacities on its large tower-base all across the country.
Physical and Financial achievements of BSNL in Sharing of Infrastructure:
Achievement of tower sharing by BSNL
Year Physical (No. of towers leased out) Revenue billed (in Rs crores)
2009-10 341 1.8
2010-11 491 29.384
2011-12 609 42.67
2012-13 538 (Till 15th Nov, 2012) 39.46Apr 2012 to Oct 2012)23
(C) DELAY IN PROCUREMENT OF EQUIPMENTS
3.12 The Committee note that in mobile business which faces severest competition,
even a slight edge of competitors effect on BSNL market share. It has been stated
that whereas private players reorient themselves to changing conditions and procure
equipment for providing services rapidly, this is many a time not possible for BSNL.
When asked to specify how the time taken for procurement by BSNL compares
with that of private sector, the DoT in a written reply stated that BSNL has to follow
the Govt. guidelines for procurement through open tender process whereas private
sector is able to procure equipment at a very fast pace because they are not bound
by any procedures followed by PSUs.
In this regard, the Secretary, DoT during evidence before the Committee on 11
December, 2012 admitted that it is a fact that in the past there were some delays on
account of procedural factors and accepted that procedural delays certainly affect the
performance of the Company. On the issue, he further deposed as under
“…………. but the fact also is that the public sector has its own procedural
requirements which it has to follow which do not necessarily apply as far as the
private companies are concerned………….
…………Sometimes these do cause delays. This had happened in the past. We
are making every effort to ensure that these types of delays do not occur. But
procedurally, their processes are not comparable to that of a private sector
although they may not be as rigid as the Government itself. Being a public sector
undertaking, they are answerable to variety of bodies and mechanisms. They
have to meet certain requirements of procedure. Sometimes these do cause
delays. They do receive instruction from various bodies………. There are
instructions received by competent bodies. In certain matters there is either a
vigilance case or court case or from some other bodies some instructions are
issued and they are required to wait for further instructions. These things do
happen in the public sector……..”
3.13 In this context, when asked whether the DoT has fixed any time frame for giving
clearance or otherwise to the BSNL procurement proposals, the DoT in its reply stated
that BSNL Board is fully empowered to finalise the tenders subject to the various 24
security guidelines issued by the Government from time to time and as such no
clearance from the Govt. is required.
3.14 When asked to indicate the time taken in each case of procurement costing Rs
10 crore and above, DoT in a written reply stated that BSNL has not been able to
procure any equipment for GSM network since the last 4 years because of cancellation
of two tenders (a) phase VI for 93 million lines and (b) 5.5m for short term requirement.
This was mainly due to complaints from the vendors and litigation. Normally, it takes
from 6-9 months for procurement of equipments from the initiation of proposal till actual
time of delivery.
3.15 When asked about the reasons for cancellation of the tenders and to what extent
the business of BSNL was adversely affected on this account in physical and financial
terms, year wise, the DoT in its reply submitted as under:
“The tenders for procurement of 93 million lines for GSM equipment was floated
the four zones of BSNL on 1.5.2008 under Phase VI project. This tender was
having provision for quantity variation up to +/-50%. The procurement was
proposed to be done in three phases for requirement of three to four years. In
this phase capacity of 33 Million lines was planned and the remaining two phases
were to have capacity of about 30 Million lines each. These capacities were
planned based on BSNL Vision document envisaging to provide 3 Million
connection in each month to maintain reasonable market share at that time. Bids
for Part I, Part II and Part III were submitted on 10.9.2008 in all the zones and
bids for the part IV was submitted on 30.9.2008 in all the zones.A communication
was received from DoT on 14.5.2009 with regard to security related concerns
connected with BSNL tenders for expansion of Telecom. Services (2G and 3G
Telecom. services) in various zones of the country wherein it was mentioned that
“In view of the pronounced security concerns in respect of Chinese vendors,
procurement of resources from these vendors for deployment, particularly in
sensitive regions would not be in the interest of national security. Therefore
resources should not be procured form Chinese vendors for deployment,
particularly in sensitive regions would not be in the interest of national security.
Therefore, resources should not be procured from Chinese vendors for
deployment in sensitive regions. The sensitive regions are defined as states
having international border with China, Bangladesh, Myanmar and Pakistan.”In
compliance to the guidelines from DoT, for Part-I and Part-II, the financial bids of
the M/s Ericsson were opened in North and East zones and that of M/s Huawei 25
(Chinese Vendor) was opened in South zone on 15.5.2009. As the DoT
guidelines didn’t allow the opening of the financial bid of the lone techno
commercially eligible bidder viz. M/s Huawei in West zone, financial bid of none
of the bidders was opened in West zone.
BSNL Board took decision to procure 5.5. Million lines GSM equipment to
meet the immediate requirement of the circles of North and East zones through a
single composite tender for 5.5. Million lines, only for 2G equipment along with
associated infra and billing integration. This requirement was mainly to reduce
congestion in the network including remote areas. The Board decided to invite
bids from the bidders who had participated in part-I and /or Part-II of Phase-VI
tender in any of the zones as suggested by CVC. In view of the standing
instruction relating to security guidelines from the Government, the bids were
called from only three non-Chinese vendors namely M/s Ericsson, M/s NSN and
M/s Alcatel Lucent centrally for North and East zones. However, change in
security guidelines compelled BSNL to call fresh bids from all the five vendors
who had participated in Part-I and/or Part-II of Phase-VI Tender as suggested by
CVC, namely M/s Ericsson, M/s NSN and M/s Alcatel Lucent, M/s Huawei and
M/s ZTE with existing tender document along with clarifications. Accordingly, the
tender floated vide tender No.MM/NWP-GSM/062010/000391 dated 23.6.2010
was cancelled and new tender was floated by MM cell vide tender No.MM/NWPGSM/082010/000395 dated 31.8.2010. Only four out of five bidders participated
in the Bid. M/s Ericsson didn’t participate in the bid. During the evaluation stage,
M/s Ericsson represented that it had not participated due to security related
guidelines/requirement mentioned in the tender even though during pre bid
stage, neither any clarifications were sought by the M/s Ericsson nor M/s
Ericsson participated in the pre bid conference held on 13.9.2010 for this tender.
However, all the clarifications were provided by BSNL to al the prospective
bidders including M/s Ericsson. M/s Ericsson chose to represent a case to the
independent External Monitors (IEMs) against this tender, even though the
vendor was not interested in the bidding. The IEMs recommended to reinvite the
tender and the tender was cancelled”.
3.16 According to the DoT, because of cancellation of these tenders, BSNL was not
able to augment capacity of its mobile network which led to congestion in various
pockets. This also caused various performance related issues like coverage problems
as well as call drops and customer dis-satisfaction. This affected the growth of mobile
connections and also the revenue. Details of Connections added from 2008 and the
revenue earned are given below:26
Year Connections added in lakhs Net revenue ( in Rs crore)
2007-08 76.16 38,053
2008-09 91.52 35,812
2009-10 157.90 32,045
2010-11 197.78 29,688
2011-12 39.22 27,934
The Committee have also been informed that the BSNL Board in its
133rd meeting held on 4.2.2011, decided for floating tender of 15 million GSM lines
for one year requirement. Subsequently, a tender for 14.37 M lines was floated on
14.7.2011 for procurement of 14.37 million GSM lines for expansion of 2G and 3G
services for the requirement of al the Telecom. Circles except Chhattisgarh,
Maharashtra, Gujarat and Madhya Pradesh Telecom. Circles which will get
equipment under PSU Quota reserved (0.63 million) for M/s ITI against this tender.
Following bidders have participated in the bids:-
1. M/s Alcatel Lucent India Ltd.
2. M/s ZTE Telecom. India Pvt. Ltd.(Chinese)
3. M/s Ericsson India Pvt. Ltd.
4. M/s Nokia Siemens Network Pvt. Ltd.
5. M/s Huawei Telecommunication India Pvt. Ltd.(Chinese)
The tender has been finalized and Advance Purchase orders (APO) has already
been issued to L1 bidders i.e. M/s ZTE Telecom. India Pvt. Ltd. & M/s Alcatel
Lucent India Ltd.
During the evidence, the Committee sought information regarding the
present status of aforesaid tender of 15 million GSM lines. In response, a
representative of the Company stated as under:
“After cancellation of that, we floated another tender. The Board had
approved that 15 million tender, which has now been successful. We have
already placed Purchase Order for North and South Zone. We are in the
process of other Zones also. So, this is the status of procurement.”27
3.17 The Committee enquired as to whether the Sam Pitroda Committee’s
recommendations on suggesting changes in the procurement processes of BSNL have
been implemented. In response, the DoT in a written reply stated as under:
“Pitroda Committee had recommended managed capacity model for procurement.
(i) BSNL had attempted to prepare a Request For Procurement (RFP) for GSM
equipment based on managed capacity model prescribed by Sam Pitroda
Committee. There were various challenges in RFP like the procedures to
be followed in the Govt. set up as well as governance model for the
managed capacity model.
(ii) Also, it is seen that managed capacity model is successful only when it is
accompanied with managed service model for giving operation and
maintenance to the vendor. This is presently not possible in BSNL set up
due to availability of sufficient manpower to maintain the network.
(iii) However, the managed capacity model has been followed in case of
providing Value Added Services as well as Call centres”.
(d) Shortfall in Achievements vis-à-vis MoU Targets
3.18 BSNL is stated to be having excellent backhaul networks and is placed well to
meet the challenges thrown by the market. Huge copper line network, OFC connectivity
will reportedly enable the company in tapping the vast broadband opportunities thrown
open for grabbing by the challenging market dynamics. Given this advantage, the
physical performance of BSNL is vastly inadequate as is evident from MOU targets and
achievements for the year 2011-12 as reported by BSNL in its Annual Report (2011-12)
and brought out below :-
Sl.
No.
Item Unit MOU Target Net
Achievement
Shortfall in
Achievement
1. Total Telephone
Connection
Lakh Conn 200 39.22 80.39%
2(a) Broadband Wireline Nos 35 14.23 59.35%
2(b) EVDO Connection Nos 100,000 -7841 -7.84
2(c) Wi-max Connection Nos 801,000 22,284 97.12%
3. TAX Kilo Circuits 84 0 -
4. OF Cable Route Kms 30,000 15,273 49.09%28
3.19 When asked to explain reasons for steep shortfall in achievements against the
annual targets set, the Company in its reply submitted as follows:
“(A) Reasons for shortfall in Mobile:
a. When MoU target for the year 2011-12 was fixed, at that time on an average
18 to 20 Million connections per month were being given by all the operators
put together. Accordingly, a target of 20 Million connections was fixed in
MoU assuming that BSNL will pick up 10% share out of these connections.
However, during the year 2011-12, all the operators, put together, gave on
an average 9 Million connections per month. BSNL was able to capture 10
to 11 % of the market share in the net connections.
b. Because of non-placement of any PO for augmentation of mobile capacity,
there was congestion in many parts in various Circles which led to reduced
demand of mobile connections.
c. The gross connections given by BSNL was 24 Million. However, because
of multiple SIM phenomena there was a tendency for customers not to
renew the prepaid connection. Accordingly the net connections were 8.2
Million.
d. There was emphasis on having growth in revenue in comparison to number
of connections being given. Thus BSNL has been able to increase mobile
revenue by 8% as compared to the previous year.”
(B) Reasons for shortfall in EVDO Connections:
(i) Target for broadband connections for BSNL was fixed combined for fixed
line as well as wireless connections out of which it was further split into fixed and
wireless as follows.
i. Fixed line broadband - 35 lakhs;
ii. EVDO - 1 lakh
iii. Wi-max - 8 lakhs
iv. 3G - 30 lakhs.
BSNL has enabled all its 2G connections with 3G facility as a result a
customer can start using 3G broadband facility once he is having a 3G enabled
handset. Thus, all 2G customers are having access to 3G broadband facility.
This enabled BSNL to achieve overall wireless broadband target.
(ii) Because of increased penetration of GSM network as well as preference
of the customers for GSM technology, the demand for CDMA connections has
decreased. Since EVDO technology is based on CDMA, as such, the growth in
EVDO connections reduced.29
(iii) BSNL had taken a strategic decision for not investing in CDMA technology
because of the reduced demand. As such, the EVDO network of BSNL is
available only in limited areas thereby limiting the growth of EVDO connections.
(C) Reasons for shortfall in WIMAX connections:
Target of 8 lakh WIMAX connections was fixed on the presumption that
BSNL will be able to roll out Wireless network in urban areas with franchisee
model. However, the agreements signed with franchisees were terminated after
six months of signing the agreement because franchisees could not roll out the
services in their allotted Licensed Service Areas (LSAs). The main reasons for
that were:
(i) Initially, franchisees had made their business model which was based on
the reserve price of spectrum that was approx. 1300 crore in all LSAs excepting
Delhi and Mumbai. However, in the auction of BWA spectrum price in these
LSAs on PAN India basis, spectrum price turned out to be 8 to 9 times higher
than the reserved price. The cost of spectrum was to be recovered from the
revenue of franchisees before revenue share was to be applied. Since this cost
was very high, therefore, the whole business model became unviable and none
of the franchisees could roll out their network in the allotted areas.
(ii) BSNL has rolled out Wireless network in rural areas basically to provide
Broadband connectivity to Common Service Centres as per the programme
under DeitY. It is observed that in rural areas, there is a very poor demand for
broadband connections which is mainly due to very poor penetration of
computers and poor power supply position in rural areas
(D) Reasons for shortfall in Broadband:
(i) Low demand of landline broadband connections in rural areas. However,
BSNL has more than 1.6Mn capacity in rural areas.
(ii) Slow growth of IT enabled services like sale of computers etc..
(iii) Lack of concentrated marketing efforts.
(iv) Lack of local language contents.
(v) Non availability of CPEs in most of the circles.
(E) Reasons for shortfall in Trunk automatic Exchange (TAX) capacity
Shortfall in achievement in commissioning of TAX capacity by 84 Kilo
Circuits against MoU targets of 2011-12 resulted due to non-procurement of
additional IPTAX equipments which was planned for the augmentation of TAXs
network in view of expansion of GSM network/ TAX traffic but same was not
required due cancellation of 93 Million GSM tender and decrease in growth of
TAX traffic.
(F) Reasons for shortfall in OFC30
Shortfall in achievement in OF cable during 2011-12 is due to insufficient
supply of OF cables to various circles as per the target as the tender was
floated to for 60,000 Kms but the supply was done only by the L1 bidder for
1,500 Kms and the rest of the 5 bidders have not accepted to supply at the L1
rate. Further, it is mentioned that OFC was partially required for providing
connectivity to Mobile Base Transceiver Stations (BTSs) which were added as
part of GSM capacity expansion. However, due to cancellation of tender for
GSM, same was not required.”
MoU Targets for the year 2012-13:
3.20 As regards targets for 2012-13 and the prospects of achieving the same, the
Company in its written reply stated as follows;
(A) Mobile - 10 Million.
MoU target for the year 2012-13 is 10 Million. The overall trend of mobile
connections is 6 to 7 Million connections per month. Many of the big operators are
showing monthly negative growth. It will be a big challenge to meet the above
targets in the present scenario. The POs for capacity augmentation for North &
South zones have been recently placed and the capacity will be available for
commercial use only from January, 2013 onwards. Because of these reasons, we
may achieve 6 Million target during this year. However, following steps are being
taken to achieve the targets.
(i) Tender for 14 Million lines has been finalized and the POs have been
placed in North & South zones. Process for finalizing the procurement
for West and East Zones is pursued vigorously.
ii) A close monitoring of the uptime of network is being done at all level.
(iii) Optimizations of network is being done to improve the quality of network.
(iv) 14 call centres have been installed to improve the customer care for GSM
queries and complaints.
(v) Various Value Added Services are being provided to attract the new
customers.
(vi) Sales & Distribution network has been strengthened.
(vii) It is observed that revenue from Voice has become flat. There is focus on
getting the revenue from data services. For this a number of steps have
been taken to increase the revenue from data plans. Some of them are:
(a) Giving data cards on very competitive price. Bundling arrangements have
been tied up with various suppliers.
(b) Giving attractive data plans. At present tariff for data for BSNL are as per
market dynamics.
(c) Network is being optimized for data flow and the speed of data network is
being improved by providing IP connectivity to 3G Nodes.
(B) Wireless Broadband – 45 Lakhs:31
Target for Wireless/ EVDO for the year 2012-13 is 45 lakhs. All 2G
connections have been enabled with 3G facility and they can start using
broadband after having 3G enabled handsets.
(C) OFC laying – 30000 Rkm
MOU target for OF cable laying for 2012-13 is 30,000 RKMs and the same
is expected to be fulfilled as P.O has already been issued for procurement of
42,000 Kms of 24 F OF cable.
(D) Wireline Broadband – 30 Lakhs:
MoU targets for wireline broadband for 2012-13 is 30 lakhs. The Comapny
has taken following action to achieve the target.
(i) BSNL has bundled computer with every broadband connections in rural
areas to remove major barrier in broadband adoption. The same is being
adopted in urban areas.
(ii) BSNL has launched various VAS e.g. Games on demand, Music on
demand, video/movies on demand, Education on demand contents on
health etc.
(iii) BSNL has launched more attractive and creative tariff plans and multi
services packages using its new Call Detail Record (CDR) based billing
systems to its customers.
(e) RURAL TELECOM NETWORK
3.21 The Committee observed that the Company is a forerunner in the country’s rural
telecom network establishment Apart from the services provided under the Village
Public Telephone segment (VPTs), the Company has also undertaken some significant
activities under Bharat Nirman-I and Bharat Nirman-II programme.
3.22 Explaining the progress made regarding rural coverage under Bharat Nirman- 1,
DoT in a reply stated that Agreements were signed between USOF and BSNL in
November, 2004 to provide subsidy support for provision of Village Public Telephones
(VPTs) in 62,302 uncovered villages of the country excluding those villages having
population less than 100, those lying in deep forests and those affected with insurgency.
The provision of VPTs in these villages has been included as one of activities under
Bharat Nirman Programme. VPTs have already been provided in 62,101 villages
(99.68%) under this scheme till the closure of the scheme on 31.08.2012.In all, there
are 5,93,601 in habited villages in the country as per census 2001 and out of these, 32
5,80,303 villages i.e. 97.76% inhabited villages have already been provide with VPT
facility as on 30.09.2012. BSNL has submitted that VPTs are likely to be provided in
remaining inhabited revenue villages by March 2013 through on-going USOF scheme of
VPTs in newly identified uncovered villages as per census 2001.
3.23 When asked whether the targets in respect of coverage of village panchayats
with broad band connectivity as envisaged under Bharat Nirman-II have been
achieved, DoT in its reply stated that Rural teledensity of at least 40% by 2014, and
broadband coverage of all 2,47,864 Village Panchayats of country has been envisaged
under Bharat Nirman II. The broadband coverage to all Village Panchayats is being
provided by BSNL without any financial support from USO fund. As per information
available in USOF, rural teledensity of 40.24% has been achieved as on 31 August,
2012 and 1,47,463 Village Panchayats have been covered with broadband connectivity
till August 2012.
3.24 As per the information furnished by the DoT the status of rural coverage
achieved by BSNL in respect of telecommunication services under VPT, GSM, CDMA
and Broadband, as on 30.09.2012, is as follows.
Telecom Service Total Inhabited Villages Village Covered % Covered
VPT 5,93,601 5,78,008 97.37
GSM 5,93,601 4,03,866 68.04
CDMA 5,93,601 4,82,432 81.27
Broadband 5,93,601 1,69,201 28.50
3.25 Emphasizing upon the potential of broadband service segment in rural areas, a
representative of DoT, during evidence deposed as under:
“In the data sector, we are still very low in comparison to the world average and
there is a huge opportunity to grow. I am placing before you that there is a
project called the National Optical Fibre Network, wherein, we are trying to lay
optical fibre cable to Gram Panchayats…. ………BSNL’s broadband coverage is
about 25-26 per cent while their voice coverage is 90 per cent. So, that gives the
message that there is a huge gap that persists. Second, with 28000 rural
exchanges which BSNL has, no other telecom player in the competitive sector
has that type of reach and outreach. If we take Optical Fibre Network to the
Gram Panchayats, they are ideally poised to leverage that infrastructure. So, this 33
particular National Optical Fibre Network is an investment which is being made
directly from the Department of Telecom under the aegis of the USOF.”
So, in a way we can say that Government investment is going to expand the
scope of the telecom sector and first among them would be the BSNL because of
its large presence in the rural areas. So, I think it gives a huge market. Second, I
am just trying to look at the eco system. If we look at the number of projects of
the Government of India which are going on – for example the e-Governance
initiatives which are going on through the Department Electronics and IT; the
Sarva Shiksha Abhiyan which is going on through the Ministry of HRD; the
National Rural Health Mission – all of them when they ultimately go in the
manner of e-learning or telemedicine or e-Governance require bandwidth. This
bandwidth we are going to get through the mechanism of National Optical Fibre
Network of which BSNL itself is a major player ruling it out. I think it gives the first
mover advantage to the BSNL. So, these are the issues which we have been
trying to focus. We have to look at the opportunities which are emerging. Of
course, in the voice sector you have competition. But if you look at the data
sector, it is projected to grow up in a significant way and we are just 14 million
broadband as of now, and the National Telecom Policy has an ambitious target
to go to 600 million by 2020. To meet that target, they (BSNL) are in the right
situation. Inevitably, we will have to see that when they compete, they have to
compete on market dynamics. We will have to see that they have to evolve an
aggressive marketing strategy, which, given the type of infrastructure that they
have in rural area, they are well poised to do it”....
3.26 On the specific query of the Committee regarding the efforts being undertaken by
the BSNL to capture the rural telecom market, the Secretary DoT during evidence
before the Committee on 11 December, 2012 deposed as under
“………I will explain the three projects which I mentioned. The National Optical
Fibre Network is being funded by the Government from the Universal Service
Obligation Fund. This was approved by the Cabinet with an estimated outlay of
Rs. 20,000 crore last October, 2011. The three PSUs, as I mentioned, are the
BSNL, Railtel and Power Grid Corporation in which the BSNL would, probably,
do substantial junk of the work. So, that is the NOFN. As far as network for
spectrum is concerned, that is being funded from the Budget. That provision is
being made in the DoT Budget but essentially this network is being implemented
for the Defence Services to provide them with an alternative medium for the
spectrum which they have vacated, some of which was sold in 2010 and got
larger revenues. The connectivity to schools is being implemented by the HRD
Ministry and the budgetary provision is made in their Budget. The implementing
agency is the BSNL……34
CHAPTER – IV
PERFORMANCE REVIEW BY THE DoT
In view of the dismal performance of the Company during the last few years, the
Committee enquired as to whether it is not the responsibility of the DoT to identify the
problems beyond the control of the BSNL management and provide possible solutions.
In its written reply, the DoT stated that BSNL Board is completely free to decide and
finalise its commercial and business policies including the procurement of equipment
without any interference. No budgetary support, in general, is given to BSNL. To identify
the problems being faced by BSNL and related issues, several committees have been
formed at various levels. Based on the deliberations in the aforesaid committees,
certain issues have been identified viz., VRS for the employees of BSNL, surrender of
BWA spectrum and compensation for rural wireline. Actions are being taken by DoT on
these issues. However, these issues involve the consultations/approval of other
Ministries like M/o Finance, D/o Public Enterprises and even Cabinet.
4.2 When asked how many quarterly performance review meetings of BSNL were
held by DOT during each of the last three years and what was outcome of such
meetings, the DoT in its reply stated that BSNL has been signing Memorandum of
Understanding (MoU) with Department of Telecommunications (DoT) on yearly basis in
accordance with the MoU guidelines of the Department of Public Enterprises. The
review of the same is held on periodic basis. Further, various interactions on overall
performance of BSNL, quality of service offered by it, suggestions for improving the
services/financial performance etc. also happen on periodic basis at various levels
including at the MOC & IT level in Department of Telecommunications. During these
meetings, the various issues and problems faced by BSNL are being discussed and
prospective corrective measures are suggested. As an outcome of one of the review
meetings, BSNL has been directed to prepare and follow up the following innovative
business proposals for revenue generation:
(i) Utilization of Land and Buildings for Call Centres/BPO/Software Park.
(ii) Monetizing of Towers.
(iii) Utilization of Telecom Factory Infrastructure for Revenue Generation.
(iv) Broadband Connectivity to Schools.35
(v) Establishing Wi-Fi network with the help of Partners.
(vi) Leasing out of CDMA/EVDO, and
(vii) MVNO for 3G.
4.3 Since there is hardly any improvement in the performance of BSNL over the last
five years, the DoT was asked to clarify whether the performance review meetings of
DOT have been ineffective and the Department has failed in its responsibility of
ensuring desired level of performance by BSNL. While replying to the query, the DoT
stated that efforts are being made by BSNL and DoT to bring improvement in the
operational and financial performance of BSNL. However, there are certain
impediments like huge wage bill (nearly 50% of the income vs 5 to 10% of private
operators), payment of upfront spectrum charge by BSNL for BWA, stiff competition in
mobile sector and inability of BSNL to augment its mobile capacity due to failure of
tenders for various reasons.
4.4 Referring to certain decisions taken /directions given by the Ministry in their
recent performance review meetings with BSNL, a representative of the DoT deposed
as under:-
“I would like to mention that the Ministry has taken review meetings with both the
CMDs of BSNL and MTNL. In fact, today morning the Minister had taken the
meeting. One of the thrust areas in which the direction has been given by the
Ministry is that you (BSNL/MTNL) have to leverage your assets to see that
marketing drive has to come about. One aspect which is fundamental is
BSNL/MTNL are in a competitive market. So, we will have to work on
competitive strategies and marketing will have to be done for which rational
deployment of your manpower to understand who can perform and where and
when has to be seen. This is an HR activity. So, the BSNL and MTNL were
asked to go back to their offices to decide who can perform what and they have
to do it on a clear cut monitoring basis.
Secondly, there are some capital assets like real estate. How to leverage
those in terms of entering into some sort of a partnership process, where the
money could be earned out of the assets, etc. Suppose if you build up a
software technology park on that area then that it becomes some sort of a
revenue income for the organisation. Leveraging your asset is the second
thing........ Thirdly, we are looking at what are called voice markets and data
markets. Up to now voice market is something where we know that there is a lot
of competition and we will have to work on trying to see which segments as you
said”..36
CHAPTER – V
HUMAN RESOURCES
(a) MANPOWER COST
5.1 According to the BSNL when it was created in 2000, it had 3,97,000 employees
transferred from DoT. It was stated that so long as its monopoly in landline and high
tariffs in mobile services continued, it could sustain this large employee base. However,
with change in technology, the manpower strength in BSNL has come down from 3.97
lakhs in the year 2000 to 2.58 lakhs as on 31.3.2012.
5.2 In view of the above, when asked about the optimum manpower requirements in
the given technological scenario and actuals there against, the DoT in a written reply
stated that the advancement in telecom technology is a continuous process. The
available manpower is positioned on the basis of workload in different businesses. In
the given technological scenario, redeployment of staff is being done from fixed line
services to new roles such as marketing, sales, distribution, customer services, etc.
These roles are very crucial in highly competitive market environment. Also, employees
are being engaged in other important activities such as Data Centres, Information
technology, in the field of improving service quality etc. The Pitroda Committee has
inter-alia recommended to the Government to retire or transfer around 1 lakh
employees through best possible processes like Voluntary Retirement Scheme (VRS).
Accordingly, BSNL has prepared a VR scheme aimed at reducing the workforce by 1
lakh and improving the Company’s financial performance.
5.3 When asked about the expenditure incurred on account of excess manpower
during each of the last five years, the DoT in its reply has stated that the expenditure
incurred by BSNL on salary and wages of the entire employees during the last five
years is as under:
Year Salary and wages( in Rs Crore)
2007-08 8,809
2008-09 11,363
2009-10 13,455
2010-11 13,791
2011-12 13,40637
However, the salary and wage cost of excess 1,00,000 manpower for
2011-12 is around Rs. 5000 crore.
5.4 When asked as to how the manpower cost of BSNL compares with that of private
sector, the DoT in a written reply stated that it is not possible to compare the manpower
cost with that of private sector because private sector is carrying out various works on
outsourcing model. However, the manpower cost of BSNL is around 50% of total
revenue as copared to 5-10% of private operators.
5.5 The Committee note that Pitroda Committee has inter alia recommended to the
Government to retire or transfer around 1 lakh employees through best possible
processes like Voluntary Retirement Scheme (VRS), BSNL, on the instance of Telecom
Commission, prepared a VR scheme aimed at reducing the workforce by 1 lakh and
improving the company’s financial performance. When asked whether any decision has
been taken on the recommendation of the Pitroda Committee, the DoT in its written
reply stated as under:-
“The Pitroda Committee has inter-alia recommended to the Government to retire
or transfer around 1 lakh employees through best possible processes like
Voluntary Retirement Scheme (VRS). The Telecom Commission considered the
Committee’s recommendations and asked BSNL to examine the VRS option
along with financial burden and cost / benefit to the company. Accordingly, BSNL
has prepared a VR scheme aimed at reducing the workforce by 1 lakh and
improving the company’s financial performance. BSNL has taken up the case for
offering Voluntary Retirement Scheme (VRS) to its employees for reduction in
Manpower in consonance with the recommendations of the Pitroda Committee &
Board for Reconstruction of Public Sector Enterprise (BRPSE) with DoT. This will
involve payment of Rs. 18,000 Crore (approx.) to the optees, numbering one lakh
including DoT’s liability of Rs 7000 crore (approx). The case has been examined
in DoT in consultation with Department of Public Enterprises and Internal
Finance Division of DoT. Initially BSNL had submitted a VR proposal as per the
guidelines for a profit making PSU. This was also discussed and it was decided
in consultation with DPE that BSNL should go with DPE guidelines in this regard.
Accordingly, several meetings were held between DoT and BSNL to finalize a
concrete proposal. In the last meeting held on 25.10.2012, certain more
clarification/information were sought from BSNL, which are awaited”.
5.6 In this connection, while deposing before the Committee on 16th November,
2012, the CMD, BSNL categorically submitted that the Company is not in position to pay 38
the money to be given to the VRS optees. The CMD also submitted that the Company
had requested the Ministry to arrange the funds for the said purpose, however, the
Ministry has not made any commitment in this regard.
5.7 During the evidence on 16th November, 2012, the Committee sought the views of
DoT on the issue of VRS to excess BSNL staff. In response, a representative of the
DoT deposed as under:
“So, the VRS itself is an issue where the Government will have to take a call. I
mean, I am not in a position to make any statement at this point of time. But, in
the long term interest to BSNL one has to reduce the staff and it is upto
Government to think over as to how to support the VRS action. I think that would
in a way help the BSNL to tide over its financial constraints”.
(b) SKILL SET OF EMPLOYEES
5.8 It was brought to the notice of the Committee that BSNL is not only beset with
large number of employees, but the skills of these employees are not suited to present
requirements because the skill set required for rendering services to Mobile customers
and Broadband customers is entirely different than the skill set required for rendering
landline services. These employees were linked with the legacy landline business which
required much more manpower compared to latest mobile technology deployed by
private players. According to the Company, the BSNL has to bear the expenses of their
pay and allowances but their productivity is low. BSNL is making efforts to retrain and
reorient the skills of a section of these employees, but it would take some time before all
of them could become real asset to the company.
5.9 Taking note of the position explained above, the Committee desired to know
about the remedial measures proposed to be taken by the Company in this regard. In
their written reply, the Company submitted as under:-
“BSNL has formulated massive training plans for its employees, to upgrade their
skill sets in various domain areas.
(i) These trainings have been into areas of Mobile, Broadband, Value Added
Services, 3G, customer Care, CDR Project, ERP project, Leased Line,
Sales / Marketing, and on similar other relevant topics.39
(ii) Large scale trainings were imparted to select employees who were part of
Project-Shikhar, under the re-Structuring and Business Process Reengineering plan of BSNL
(iii) Through these massive training programs, we hope to enhance skill sets
of our employees in all the desired operational areas of BSNL, so as to
help it face competition in the telecom sector.
The above steps in upgrading the skill set of the employee along with the major
initiative as indicated above will enable BSNL to be competitive in the fiercely
competitive telecom industry.”
5.10 As per the Annual Report (2011-12), a total number of 80,013 employees
(Executives-32,173, Non Executives 47,840) were imparted trainings by the Training
centers of the Company.
5.11 When asked about the problem of attrition, if any, being faced by the Company
and its plans regarding recruitment of young talent, the Company in its written reply
submitted :-
“During the last five years, about 841 Executives out of total strength of about 56,
000 have taken Voluntary Retirement from service, whereas 27 have resigned
from the services. This comes out to be an attrition rate of about 0.32%, which is
negligible in comparison to the attrition rate of more than 20 % in case of private
service providers. The process of recruiting young talent, possessing higher
qualifications (Minimum Engg. Graduates), started in the year 2001 and 2002
when 6349 Junior Telecom Officers (Entry Level Executives/Engg. Graduates)
were recruited. To continue with the process, 5334 Junior Telecom Officers and
6,685 Telecom Technical Assistants have also been recruited during the last 5
years. In addition, the process of direct recruitment of 115 Deputy General
Managers ( a middle level management officers) is also under process.”
5.12 On being asked about the updated status regarding the direct recruitment of
Deputy General Managers, the Company in its reply stated that BSNL has started the
process for the recruitment of 162 Dy. General Managers. BSNL has released the
advertisement for recruitment of DGMs on 24.09.2012 in the newspapers and uploaded
on BSNL’s website on 14.09.2012. Online registration of candidates is likely to start
from 16.11.2012.
The vacancy position and its distribution is as follows :40
Name of Posts Distribution of Vacancy
OC OBC SC ST PH
(Common)
Total
DGMs in BSNL Telecom 48 38 13 07 04 106
DGMs in BSNL Telecom
Finance
27 16 09 04 02 56
ABSORPTION OF INDIAN TELECOM SERVICE OFFICERS
5.13 Consequent upon formation of MTNL and BSNL, Group ‘A’,”B’,’C’ and ‘D’
employees of the Department of Telecommunications were transferred to these PSUs
on ‘as is where is ‘basis on deemed deputation. About 3,97,000 Group B, C & D
employees already stand absorbed in BSNL/MTNL. As per decision of the Government,
the ‘deemed deputation’ of ITS Gr. ‘A’ officers was to end on 30.09.2005, later extended
upto 15.10.2005 and 22.12.2008. However, the said period has since been continued till
the completion of absorption process.
5.14 When asked about the present status regarding the absorption of Group A
officers in BSNL, DoT in its reply submitted as under:
“Group ‘A’ officers of various services under Ministry of Communications & IT
including Indian Telecom Services (ITS) officers were asked to exercise their
option for absorption in BSNL / MTNL as per the terms and conditions approved
by the Cabinet initially in the year 2005 and later as per revised terms and
conditions in August 2008. As the response of Group ‘A’ officers towards
absorption was very poor, final opportunity was given to all Group ‘A’ officers in
September 2011 on the terms and conditions approved by Cabinet in 2008 for
exercising their option for absorption in BSNL / MTNL by 8th November 2011.
Against absorption offers given in 2005, 2008 and 2011, out of a total of
3088 working Group ‘A’ officers, 802 including 184 ITS officers sought absorption
in BSNL / MTNL.
Officers on deemed deputation to BSNL/MTNL but not opting for
absorption in BSNL / MTNL till the last date prescribed for exercising option i.e.
8.11.2011 were ordered to be reverted / repatriated to the Government from
9.11.2011 onwards. Consequently, out of total 1472 Group ‘A’ officers (including
1428 ITS officers) on deemed deputation to BSNL and MTNL, 434 Group ‘A’
officers (including 396 ITS officers) have been relieved by BSNL/MTNL to join
DOT. A total of 1028 ITS officers are yet to be relieved by BSNL/MTNL (945 by
BSNL and 83 by MTNL) for reverting to the DoT.
Total number of sanctioned posts of ITS in DoT is 463 (9 HAG + 56 SAG
+ 100JAG + 280 STS + 18 JTS). Taking into account the options exercised, a
total of 1558 (43 HAG + 601 SAG + 914 JAG) ITS officers are likely to be
declared surplus. Accordingly, DoT has constituted Surplus Staff Establishment
(SSE) for referring the names of ITS officers identified to be in excess of the 41
requirements of this Department to the Surplus Cell of the Government for their
redeployment. The order constituting the said SSE has been stayed by Jaipur
and Hyderabad Benches of CAT.
Both BSNL and MTNL have intimated that in the event of immediate
repatriation of all the unabsorbed ITS officers presently working on deemed
deputation in these organizations (945 officers working in BSNL and 83 officers
working in MTNL), it will not be possible for them to find suitable replacements
immediately to occupy vital positions at middle and senior management levels
and a sudden vacuum at these levels will seriously affect their functioning.
BSNL & MTNL have requested DoT to allow retention of ITS officers
presently on deemed deputation to these organizations since they have not been
able to build cadre of their own officers at middle and top management level due
to continuous availability of Group ‘A’ officers including ITS officers as well as
non conclusion of the process of absorption under Rule 37-A of CCS (Pension)
Rules, 1972. BSNL and MTNL have further informed that they would require the
services of these officers on a temporary and diminishing basis for a maximum
period of 10 years in which they would be able to build their own cadre of officers
through the process of recruitment and promotion.
It may also be noted that both BSNL and MTNL have proposed further
repatriation of ITS officers on year to year basis in the next 10 years as BSNL
and MTNL build up their own cadre of officers. The cadre review of the ITS
officers has not taken place since 1988 particularly after the incorporation of
BSNL to assess the actual requirement of the ITS officers in the post absorption
and post BSNL incorporation scenario. It is also mentioned that the majority of
these ITS officers currently in the cadre were recruited before the incorporation of
BSNL when the DOT used to perform those functions including telecom
operations which are at present being performed by BSNL.
In view of the facts mentioned above, Committee of Secretaries headed
by Cabinet Secretary and comprising of Secretary (Telecom), Secretary
(Personnel), Secretary (Expenditure), Secretary (Pension and Pensioners
Welfare) and Secretary (Legal Affairs) has been constituted to consider various
issues relating to absorption of Group ‘A’ officers including ITS officers in BSNL/
MTNL. Two meetings of the Committee of Secretaries have already been held
on 27th September 2012 and 29th October 2012. The matter would also need to
be taken for consideration of the Cabinet after the final recommendation of the
Committee of Secretaries.”42
CHAPTER – VI
RESTRUCTURING AND REVIVAL OF BSNL
(a) SAM PITRODA COMMITTEE REPORT
A Committee headed by Sam Pitroda was constituted by the Government
to address both the short as well as long term issues affecting the financial health and
competitiveness of BSNL. The Report was submitted on 9.2.2010. A brief summary of
the main recommendations of Sam Pitroda Committee Report is as follows:
Focus on selection of the best professionals from the market at market rates
Appoint an eminent person from the private sector as the chairman
Separate the post of the Managing Director/ CEO (from CMD)
Change the board composition to seven directors (one internal(MD/CEO), two
government nominee, three external and non executive chairman )
Provide three year contracts with specific targets for all key management team
Establish four independent business units for Fixed access, Mobility, enterprise
and New businesses.
Complete ITS absorption process immediately.
Induct significant young talent in technology, IT, marketing, sales, etc.
Retire or transfer around 100K employees through processes like VRS.
Change procurement processes and procedures substantially using tools such
as e-Procurement, vendor rating, rate running contracts, schedules, etc.
Disinvest 30% through Indian strategic investor and at Initial Public Offering
(IPO) to return 10% to the government and use 20% for employee VRS,
expansion and operation.
Provide 30 million new high speed broadband connections in the next three
years
Unbundle local loop for public and private companies
Proactively offer sharing of active and passive infrastructure to other operators
Enhance rural communication facilities by connecting 250,000 panchayats
Create a separate subsidiary company for tower related infrastructure
Create a separate subsidiary to hold land bank and other real estate assets
Establish a BSNL venture fund to invest and/ or acquire small appropriate
technology company
6.2 The Sam Pitroda Committee Report was deliberated upon by the Board of
Directors of BSNL in their meeting on 10.03.2010 and BSNL’s views on the
recommendations contained in the Report were furnished to DoT on15th March 2010. 43
According to the Company, it is broadly in agreement with the recommendations of the
Pitroda Committee. However, on certain recommendations BSNL had pointed out
implementation concerns and these are mentioned below:
Recommendation Views of BSNL Board
Focus on selection of the best professionals from the market, at
market rates, for higher level management, with relevant
experience and domain expertise (estimated around 30-50).
Internal candidates should be given equal opportunity, without any
policy of preferential treatment.
BSNL being a Central PSU is
governed by DPE’s
guidelines/recommendations with
respect to Salaries/wages of the
Employees at all levels including
Functional Directors/CMD/MDs,
feasibility of implementing this
recommendation may accordingly
require Govt’s attention. In addition to
other issues, concerns such as (i)
career aspirations of internal
candidates, (ii) modalities to address
the issues of difference in market
salaries and PSU pay scales and the
selection process, applicability of Govt
guidelines on reservation may also
require redressal.
Change the board composition to seven directors, one internal
director (MD/CEO), two government nominee non-executive
directors with relevant skill set, three external independent
directors of eminence and relevance and the non-executive
chairman. CFO and COO shall be permanent invitee to the Board.
In the existing structure, Business Unit
heads are the overall heads of the
business with full accountability and
control to drive the business. Hence it
is important for them to be full time
members of the Board to be effective
in their desired role. The DPE’s
guidelines on composition of the
Boards of PSUs also prescribe that in
schedule A & B category PSUs the
personnel and finance functions
should be headed by Board level
positions. BSNL is schedule ‘A’ PSU
with Mini Ratna category-I.
Appoint a full time Chief Technology Officer (CTO), a Chief IT
Officer (CIO), Chief Operating Officer (COO), and a Chief Financial
Officer (CFO), all of whom should report directly to the CEO.
Business Unit heads appointed for
each
Business unit are in principle COO &
CTO roles combined in one central
role. There should be a CIO as
recommended and also a CMO (Chief
Marketing Officer).44
6.3 The DoT in a written reply informed the Committee that the recommendations of
the Sam Pitroda Committee were discussed in the full Telecom Commission meeting
held on 7th July 2010 which decided to constitute a search-cum-selection committee for
the appointment to the posts CMD, BSNL. The Commission also suggested for
constitution of internal committee under Chairmanship of Member (Services),
Department of Telecommunications to give its recommendations on the report. The
committee may take inputs from BSNL including Employees Associations of BSNL.
Accordingly, a search-cum-selection committee and an internal committee have also
been also constituted.
Restructuring / Revival Initiative taken by BSNL
6.4 The Committee have been informed by the BSNL that it has engaged a
professional and internationally renowned consultant M/s Boston Consultancy Group
(BCG) to improve its overall performance and change in the management structure.
Based on the recommendations of BCG and as a result of its own internal thought
process, BSNL has taken the following steps for its revival:
Structured itself into four business Verticals viz Consumer Mobility, Consumer
Fixed Access, Enterprise and New Business.
Retire or transfer around 100 K employees through best possible
processes like VRS.
Scheduled retirements over the next 5
Years are estimated to be around
60,000. Typical challenges associated
with VRS, e.g. strong resistance from
the unions, possibility of losing good
people, and the risk of creating a
strong negative sentiment. VRS may
be targeted at specific cadres where
there is significant surplus workforce
and to be done as a series of small
specific VRS schemes.
Government should consider providing
BSNL with a financial package to
cover the cost of the VRS scheme
(approximately 4-5 years of salary).
Disinvest 30% in stages at the appropriate time, say after
fundamental changes have been made to enhance enterprise
value, through Indian strategic investor and at Initial Public Offering
(IPO) to return 10% to the government and use 20% for employee
VRS, expansion and operation. Further disinvestment could be
considered after a detailed performance review in three years time.
Decision of BSNL Board requesting
the Govt. to consider to offer for sale
to the public 10% of its share holding
in the Company with ESOP/ESPS as
per practice followed by CPSUs had
already been communicated by BSNL.45
Strengthening of Marketing, Sales and Distribution Channels through specific
targeted Projects
Continuous improvement in Customer care through Project Smile
Emphasis on Value Added Services to increase ARPU.
Leveraging IT (ERP, CDR etc) for bringing efficiency in all its operations.
Growth of 3G, Broadband (DSL, Wi-Max) and Data Centre Services
Creating a segmented go-to-market approach to tap the enterprise market. The
Gold and Platinum customers are being served directly by in-house sales force of
BSNL while Silver customers are being taken care of by Channel partners.
6. 5 Referring to some measures being taken/considered by the Government to
improve the financial health of the Company, the Secretary during the evidence
deposed as under:-
“........ for a number of large Government projects which are of strategic
importance, for example, the network for spectrum, which is being done for the
defence service, at a cost over Rs. 10,000 crores, the National Mission of
Education through ICT, which involved two projects close to Rs. 10,000 crores,
the Government secure network which is again about Rs. 2000 crores, the
National Optical Fibre Network which is of Rs. 20,000 crores project, which is
being implemented by BSNL and Rail Tel and Power Grid in which BSNL has a
major share. These types of large Government projects are being implemented
by BSNL and these would supplement their revenues as well as utilise their
manpower. Lastly, the BSNL has, keeping in mind the huge amounts paid for
spectrum, have given a proposal for surrender of some part of spectrum because
what the private companies did is that they did not bid for spectrum for the whole
country. Somebody has bid for one part; somebody else has bid for another part;
then they have formed an alliance and use that spectrum. So, the BSNL has
now revaluated and suggested that in some areas they would like to surrender
the spectrum and that they should be compensated for that. That is something
that we are looking at and we will have to examine it in consultation with the
Finance Ministry how to make that adjustment for BSNL.......
.....These are some of the major items that we are making to see how to
put BSNL on to a more sound footing financially. We are quite hopeful that with
all these steps, projects and plans which BSNL has made, over the next three to
four years the turnaround will be possible”.
Disinvestment
6.6 It is observed that the Board of Directors of BSNL took a decision on 25.07.2008
to list of BSNL in stock exchanges as the same would lead to specific advantages in
valuation of its shares, better employee morale and productivity, creation of personal 46
wealth of the employees through stock auction, increased credibility with business
partners, increased capability and enhanced ability to raise money, improved financial
position without dilution of the stake, improvement in management and employee
performance and occurrence of corporate culture, etc. It has been stated that there was,
however, stiff opposition by the trade unions / associations against any move for
disinvestment / listing through IPO route. Performance of BSNL has since been
deteriorating from bad to worse. The DOT has stated that the issue of listing would be
taken up after performance of BSNL improves.
6.7 In view of the above, the DoT was asked to clarify whether the BSNL has any
vested interest, in not improving its performance, as improved performance may lead to
disinvestment of shares which is opposed by its employees. In its reply to the query, the
DoT explained its position as follows:
“The Inter-Ministerial Committee of the DPE, while considering the conferment of
Navratna status to the BSNL, in its meeting held on 29.9.2008 decided “to
consider prior listing of BSNL a condition for grant of Navratna Status”; and,
further observed that “the question of listing will be decided at the level of Apex
Committee”.
Accordingly, on receipt of communication dated 24.7.2008, conveying the
directions of the Apex Committee for prior listing of BSNL before grant of
Navratna status from the administrative Ministry, the “possibility for getting itself
listed”, was explored by BSNL; and, the Board of Directors, in their 113th meeting
held on 25th July 2008 had deliberated the issue and observed that, “at this
stage, to enable the Company to get listed, the appropriate course of action
would be that Govt. may be requested to offer for sale to the public a part of its
holding in BSNL, say 10% with ESOP / ESPS as per the practice followed by
other CPSEs” Further, the Sam Pitroda Committee had recommended for
disinvestment of 30% through Indian strategic investor and at Initial Public
Offering (IPO) to return 10% to the government and use 20% for employee VRS,
expansion and operation. The Telecom Commission, in its meeting held on
30.11.2010, has decided that “This is not the opportune time for listing &
disinvestment of BSNL, as company is on downward performance path &
disinvestment may not realise true value of the company. In absence of listing,
option of giving stocks as incentive, to key management team is not available for
the present.”
6.8 To a specific query as to whether the fundamentals of BSNL are not strong
enough to go for listing even at this stage, the DoT in its reply stated that It is a fact that 47
fundamentals of the BSNL – being the successor of erstwhile Central Government
Departments of Telecom Services and Telecom Operations – are very strong. Before
taking a decision for listing, in addition to strong fundamentals, the following key issues
which have a bearing in valuation of the shares merit consideration:-
Capital Market Dynamics inter-alia,
(i) Investors response to the contemporary IPOs in the sector specific companies,
(ii) Appetite of prospective retail and institutional investors both domestic and FIIs;
(iii) Secondary Market conditions etc.
Despite strong fundamentals, the company will have to weigh the listing option
vis-a-vis present market conditions, its declining cash flows and the competition.
Therefore, going to market after turning around may ensure better valuation of the
Company and may eliminate the fear of possible under valuation if any. 48
CHAPTER – VII
3G TECHNOLOGY SPECTRUM ALLOCATION
ADVANCE ALLOCATION OF SPECTRUM TO BSNL
3G spectrum was allocated to BSNL in September, 2008 and the 3G services
were commercially launched by the Company on 27th February, 2009. As on
30.09.2012, BSNL has covered 1060 cities with 3G network covering almost all district
headquarters, commercially important towns and tourist places.
7.2 The Committee have been informed by the Ministry that advance allotment of 3G
and BWA Spectrum to BSNL/MTNL was made on their own request with the condition
that they would also pay one time Spectrum fee at a price equal to the price determined
through the auction of 3G and BWA Spectrum. This condition was also incorporated in
the NIA (Notice Inviting Applications). Therefore, BSNL/MTNL were asked to pay the
same Spectrum charges for 3G and BWA as was paid by other successful bidders,
which was determined through the e-auction process.
7.3 The Committee were informed that BSNL allocated 3G Spectrum one year in
advance i.e. in September, 2008 as compared to the private players, but it had to pay
Rs. 10186.58 crore to DoT matching the highest bidding price. In this regard when
enquired as to whether BSNL had weighed the financial implications of the advantage of
advance allocation vis-à-vis highest bid price the Company had to pay. BSNL has
stated that the decision was taken by DoT. It was also stated that no financial analysis
has been done by the Company in this regard.
7.4 On being asked as to whether the decision for advance allocation of 3G
spectrum at the highest bidding price was taken by Government itself or it was taken by
the Government on the suggestion of BSNL, the Company in its written reply stated that
the above decision was taken by the Government on the basis of its request with the
following justification.
(a) BSNL has got mandate to provide the 10 million broad band connections
by the year 2010, accordingly BSNL has plan to achieve this target through 3G 49
and BWA technology as these wireless technologies are capable to provide
broad band and are easier to install and roll out services.
(b) The rollout of 3G services by BSNL may increase the broadband
penetration in rural areas which shall be benefited in terms of e-education, ehealth etc. Rollout of 3Gservices with coverage across country including rural
areas by BSNL would be in the large interest of public. However, since bid price
has gone much higher than it was anticipated, it is likely to take longer time for
BSNL to recover the price paid for 3G Spectrum.
REIMBURSEMENT OF LICENSE FEE
7.5 According to BSNL, the New Telecom Policy-1999 provides for full
reimbursement of the license fee paid by BSNL for its mobile services. In the first 5
years of formation of BSNL, the same was reimbursed. However, subsequently the
reimbursement has been stopped by the Government. It was further stated that since
the price of 3G and BWA Spectrum had gone much higher than the reserved price,
BSNL had requested the Department of Telecommunication to reimburse the price of
the Spectrum. The Department of Telecommunication accordingly requested the
Ministry of Finance to favorably consider the request of BSNL/MTNL for reimbursement
of 3G and BWA Spectrum charges. However, the Ministry of Finance did not accept the
request.
7.6 DoT in written reply has stated that BSNL’s request for reimbursement of 3G
and BWA spectrum charges has not been acceded to by the competent authority due
to the following: -
(a) One of the terms of allotment of spectrum to BSNL was that BSNL would have to
pay a onetime spectrum fee at a price equal to the highest bid, and determined
through the auction of 3G and BWA services. This condition was also
incorporated in the Notice Inviting Applications (NIA). Thus, the present request
of BSNL for the reimbursements of the amounts is contrary to the agreed terms
and conditions and cannot be supported at this belated stage.
(b) If the request of reimbursement is accepted in case of BSNL, level playing field
considerations can be invoked by other market participants and the issue is
therefore fraught with legal considerations.50
In this connection, the Secretary, DoT, while deposing before the Committee on
11, December, 2012 stated as follows:
“keeping in mind the huge amounts paid for spectrum have given a
proposal for surrender of some part of spectrum because what the private
companies did is that they did not bid for spectrum for the whole country.
Somebody has bid for one part; somebody else has bid for another part;
then they have formed an alliance and use that spectrum. So, the BSNL
has now revaluated and suggested that in some areas they would like to
surrender the spectrum and that they should be compensated for that.
That is something that we are looking at and we will have to examine it in
consultation with the Finance Ministry how to make that adjustment for
BSNL.”
AVAILABILITY OF 3G HANDSETS
7.7 The Committee have been informed by the Company that 3G services are likely
to gain full momentum after the availability of affordable 3G handsets and user friendly
applications. Explaining the steps being taken in this direction, the Company in its
written reply stated that it has done the agreement with hand set manufacturers and
offers 3G plans bundled with these handsets. BSNL has also procured 3G data cards
directly from the market and sells these to customers with 3G plans. BSNL has done
agreement with many value added services providers and these services are being
offered to the customers.51
PART – II
OBSERVATIONS /RECOMMENDATIONS OF THE COMMITTEE
The Committee are unhappy about the dismal performance of BSNL during
the last few years, partly due to managerial deficiencies and partly due to factors
beyond the control of BSNL management. The Company which earned a net profit
of as much as Rs. 10183 Cr. in 2004-05 started incurring huge losses from the
year 2009-10 onwards. The Company’s loss was Rs. 1823 cr. in 2009-10 which
jumped to 6384 Cr. in 2010-11 and further increased to Rs. 8851 Cr. in 2011-12.
The deteriorating performance of BSNL is observed to be mainly on account of
steady decline in the Company’s income from Rs.38053 Cr. in 2007-08 to Rs.
27934 Cr. in 2011-12, attributable to steep decline in land line revenue and other
factors. The Company’s expenditure also went up from Rs. 33636 Cr in 2007-08 to
Rs. 36586 Cr in 2011-12 consequent upon pay revision, reduction in financial
support from the Government, etc. Delay in capacity expansion due to
cancellation of tenders relating to the procurement of essential equipments also
impacted the Company’s performance considerably. The Committee received an
impression that interests of BSNL were neglected by the Government for long. It
is only now, steps are being taken to augment BSNL’s revenue through
Government projects, exploiting the potential in broadband services, exploiting
idle assets and through other measures. Telecom Secretary was hopeful when he
appeared before the Committee that over the next three to four years BSNL’s
turnaround will be possible. The Committee require the DoT and BSNL to
implement all the proposed measures of turnaround strategy in right earnest and
ensure that BSNL achieves breakeven at the earliest.
2. There have been steady decline in BSNL’s market share of wireline
connections from 82.75% as on 31.3.2007 to 69.73 % as on 31.9.2012. BSNL’s
capacity utilization in landline segment also fell from 61.8% as on 30.09.2009 to
52.66% as on 30.09.2012. The Committee are not satisfied with the BSNL’s
explanation that substitution of landline phones by mobile phones/surrender of 52
extra wireline telephones causes the fall in landline market shares. The
committee note in this connection that wireline market share of private players
went up from 8.13% to 20.16% during the same period. The Committee feel that
the fall in BSNL’s market share has something to do with its quality of service
which has been way below compared to that of private operators. The Committee
emphasize that management of BSNL should take urgent steps to improve its
customer service and regain the confidence of customers through efficient
service to ensure full utilization of its landline capacity.
3. The committee observe that the main reasons for BSNL’s fall in its market
share in wireless segment from 18.66% as on 31-03-2007 to 10.99% as on
31.09.2012 was due to impediments in augmenting its capacity of mobile network
and consequent congestion in various pockets. BSNL, for reasons beyond its
control, could not procure any equipment for GSM network during the last five
years due to repeated cancellation of tenders for procurement of 93 million lines
in the year 2008. The Committee note the Telecom Secretary’s admission that in
the past there were some delays on account of procedural factors which
adversely affected the performance of BSNL. The Committee deprecate the way
the BSNL has to face inordinate delay in procurement of equipments essential for
its expansion of mobile network. The repeated cancellation of tenders and
consequent undue long delay in this regard was either due to Government’s
procedural requirement or due to Government’s security guidelines or due to
vendor’s complaints/litigation. The Committee feel that it is high time that DoT
looks into the matter afresh and streamline the system in such a way that BSNL is
able to procure its much needed equipments within a time frame comparable to
its competitors. Alternatively, BSNL should be compensated for the losses it
suffers on adhering to Government prescribed procedural requirements.
4. The Committee desire that the procurement process of new tender finalized
recently be completed expeditiously and ensure speedy capacity augmentation
and network expansion under intimation to the Committee.
5. One of the factors which adversely affects BSNL’s performance relates to
services provided by it, which are uneconomical but socially desirable. BSNL was 53
compensated initially for these services through reimbursement of license fee
and spectrum charges from 2001-02, subsequently, through Access Deficit
Charges (ADC) from May 2003 and later through Universal service obligation fund
as subsidy for rural wireline network from July 2008 to February, 2011. TRAI is
stated to have recommended the subsidy for two years from July 2011 – Rs. 1500
Crore for the first year and Rs. 1250 Crore for the second year. The release of
amount for the first year is stated to have since been cleared. The Committee are
of the view that there should be a level playing field for BSNL and private
operators. The Committee desire that BSNL should not be put to any
disadvantage because of operation of uneconomical services mandated by the
Government and should continue to be compensated for this purpose.
6. The Committee observe that the Company earns revenue by monetizing the
huge assets of land and building, towers and bandwidth. The Committee have
been assured by the Telecom Secretary that BSNL will not dispose its land and
other assets. BSNL has only been allowed to utilize idle assets in a productive
manner. The Committee hope that such efforts will add to the revenue of BSNL.
The Committee would like to know how much has been earned through such
efforts during each of the last three years.
7. The Committee have been informed that Sam Pitroda Committee in its
report on restructuring of BSNL has, inter-alia, recommended for substantially
changing the procurement procedures using tools like e-procurement, vender
rating, rate running contracts, schedules etc. Pitroda Committee has also
recommended ‘managed capacity’ model for procurement and ‘managed service
model’ for giving operation and maintenance to the vendor. This is presently not
possible in BSNL set up due to availability of surplus manpower to maintain the
network. However, the ‘managed capacity model’ has been followed in case of
providing Value Added Services as well as Call centers. The Committee hope that
necessary steps will be taken to implement the aforesaid recommendations of
Pitroda Committee at the earliest.
8. The Committee find that there is huge potential for BSNL to exploit in
broadband service segment in rural areas. As against 5,93,601 inhabited villages 54
only 1,69,201 villages constituting 28.5% have been covered with broadband
connectivity as on 30.09.2012. According to BSNL’s Annual Report (2011-12),
huge Copper Line Network, Optical Fibre Cable connectivity will enable the
Company in tapping the vast broadband opportunities thrown open for grabbing
by the changing market dynamics. The Committee desire that BSNL should
evolve suitable tariff rates and marketing strategies to exploit the full potential of
broadband segment. The Committee are of the opinion that if the Company
optimally utilizes its rural infrastructure and capitalize on its strengths, the
revenue so generated would help its turnaround. The Committee urge that
problems such as irregular functioning of mobile towers, incidents of thefts, and
modernization of telephone exchanges in rural areas need to be dealt with on
priority basis in order to improve telephone service connectivity in rural areas.
9. Though staff strength of BSNL has come down from 3.97 lakhs in the year
2000 to 2.58 lakhs as on 30.09.2012, Sam Pitroda Committee has held the view
that around 1 lakh employees (wage cost of Rs. 5000) crore are redundant and
may be dispensed with through best possible processes like VRS. The Committee
note that staff cost was about Rs. 13,406 crore in 2011-12 i.e. almost 50 per cent
of its revenue, which is abnormally on the higher side as compared to private
companies whose expenditure is stated to be in the range of 5-10 per cent. BSNL
has requested the Government to provide Rs.18,000 crore to implement VRS
scheme which is stated to be under the consideration of the Government. The
Committee desire that the request be considered sympathetically and an
expeditious decision taken in the matter. The Committee also suggest that BSNL
should identify the divisions/areas which are burdened with excessive staff and
work out a plan for their redeployment to other suitable sections/ departments
10. The Committee regret to note that even eight years after commencing the
process for absorption of Group ‘A’ officers of DoT in BSNL, the process has not
been completed. The Committee desire that the Government should take up this
issue with due promptitude and complete the process without any further delay.
The Committee are of the view that excessive dependence of BSNL on the
deputationist officers for handling important managerial posts is not in the best 55
interests of the Company, as they may not have a sense of belonging. The
Committee, therefore, desire that the Company should expedite the process of
building up its own cadre and complete the same within a time bound period.
11. The Committee note that BSNL is not only beset with large number of
employees but also the skills of majority of these employees do not suit or align
with the requirement for rendering services to the growing mobile and broadband
customers against the backdrop of emerging modern technologies. Though
BSNL has taken for upgrading the skills of its employees through training
programs and corporate restructuring initiatives, the Committee feel that there is
an imperative need to have more such programme at frequent intervals so as to
reorient and upgrade the skills of legacy manpower in view of the demand of
modern telecom market. Considering the fact that the Company has entered into
the 3G market, the Committee feel that there is an urgent need to induct fresh and
professional talent in the organization to meet the need of the rapidly changing
telecom market. The Committee, therefore, recommend that the Company should
expeditiously fill up the vacant posts meant for the skilled staff so as to have a
pool of employees who can deliver as per the requirements of the Company in a
highly competitive telecom market. The Committee also desire that until the
recruitment process for required skilled staff is completed the Company should
evolve a plan for rational deployment of its manpower in accordance with the
various operational needs so as to deal with the shortage of skilled manpower.
12. The Committee have been informed that recommendations of the Sam
Pitroda Committee were discussed in the full Telecom Commission meeting and
an internal committee under the Chairmanship of Member (Services) has been
constituted to give its recommendations on the report. The Committee would like
to be apprised of the Internal Committee’s reports and action taken thereon.
13. The Committee further note that BSNL has engaged a professional
consultant M/s Boston Consultancy Group (BCG) to improve its overall
performance and change the management structure. Based on the
recommendations of BCG, BSNL has reportedly restructured itself into four
business verticals viz Consumer Mobility, Consumer Fixed Access, Enterprise 56
and New Business. The Committee trust that the restructuring of the company
would give a professional orientation to its functioning and help the company in
improving its performance to desired level. The Committee would like to be
apprised of the impact of the restructuring on the overall performance of the
company.
14. For revival of BSNL, action is reportedly being taken on several fronts and
given the kind of spread and presence the BSNL is having, clearly there are
opportunities for BSNL to take advantage of these opportunities more than the
other players who may not have such a wide presence in rural areas. Further, the
BSNL has the highest spread of infrastructure in terms of optical fibre across the
country and it is being worked out how such infrastructure could be better
leveraged. The Committee feel that Company’s widespread infrastructure and
future business potential in telecom market offers immense possibility of
turnaround of the Company. The Committee, therefore, recommend that it is
imperative that the Government finalize a concrete revival plan and take
necessary steps to enable the Company to harness the emerging opportunities in
telecom sector.
15. The Committee have been informed by the Secretary, DoT that BSNL has
made a proposal for surrender some part of the spectrum under its possession.
The Committee urge the Government to consider the request of the BSNL
expeditiously keeping in view the BSNL’s poor financial condition.
New Delhi: SHRI JAGDAMBIKA PAL,
29 April, 2013 Chairman,
09 Vaisakha, 1935 (Saka) Committee on Public Undertakings.57
MINUTES OF THE 10th SITTING OF THE COMMITTEE ON
PUBLIC UNDERTAKINGS (2010-11) HELD ON 25th AUGUST, 2010
The Committee sat from 1645 hrs to 1830 hrs.
PRESENT
Chairman
Shri V. Kishore Chandra S. Deo
Members, Lok Sabha
2 Shri Ramesh Bais
3 Shri Shailendra Kumar
4 Shri Baijayant Panda
5 Chaudhary Lal Singh
6 Shri Ganesh Singh
7 Shri Rajiv Ranjan Singh alias Lalan Singh
Members, Rajya Sabha
8 Shri Birendra Prasad Baishya
9 Shri Prakash Javadekar
10 Shri Bharatkumar Raut
11 Ms. Mabel Rebello
12 Dr. T. Subbarami Reddy
13 Shri Tapan Kumar Sen
Secretariat
1. Shri J.P. Sharma Joint Secretary
2. Shri Ravindra Garimella Additional Director
3. Shri Ajay Kumar Garg Additional Director
Representatives of Bharat Sanchar Nigam Limited
1 Shri Gopal Das CMD, BSNL
2 Shri R.K. Agarwal Director (Consumer Mobility)
3 Shri Rajesh Wadhwa Director (Consumer Fixed Access)
4 Shri S.R. Kapoor Executive Director (Finance)
5 Shri J.K. Roy Executive Director (Corp. Affair)
2. The Chairman welcomed the representatives of Bharat Sanchar Nigam Limited
(BSNL) and drew their attention to Direction 58 of the Directions by the Speaker relating
to evidence before the Parliamentary Committees. The representatives of BSNL made a
power point presentation on the subject. The Chairman and Members raised queries on 58
various aspects pertaining to the subject and the explanations/clarifications on the same
were given by the representatives of BSNL. Information on some of the points raised by
the Committee was not readily available with the representatives of BSNL. They were
therefore asked to furnish the same to the Committee Secretariat at the earliest
possible.
3. The Chairman then thanked the representatives of BSNL for providing all the
information on the subject matter as desired by the Committee.
4. The witnesses then withdrew.
(Verbatim record of evidence has been kept.)
The committee then adjourned.59
MINUTES OF THE 11th SITTING OF THE COMMITTEE ON
PUBLIC UNDERTAKINGS (2010-11) HELD ON 21st SEPTEMBER, 2010
The Committee sat from 1100 hrs to 1315 hrs.
PRESENT
Chairman
Shri V. Kishore Chandra S. Deo
Members, Lok Sabha
2 Shri Ramesh Bais
3 Shri Ambica Banerjee
4 Shri Anant Kumar Hegde
5 Shri Shailendra Kumar
6 Shri Baijayant Panda
7 Shri Ganesh Singh
8 Shri Rajiv Ranjan Singh alias Lalan Singh
Members, Rajya Sabha
9 Shri Birendra Prasad Baishya
10 Shri Naresh Gujral
11 Shri Prakash Javadekar
12 Shri Bharatkumar Raut
13 Ms. Mabel Rebello
14 Shri Tapan Kumar Sen
Secretariat
1. Shri Rajeev Sharma Director
2. Shri Ravindra Garimella Director
3. Shri Ajay Kumar Garg Additional Director
Representatives of Department of Telecommunications
1 Shri R. Chandrashekhar Secretary, DIT & DoT
2 Shri Chandra Prakash Member (IT)
3 Mrs. Vijaylakshmi K. Gupta Member (F)
4 Shri Ajay Bhattacharya Admn., USOF
5 Smt. Sadhana Dikshit Adv. (F)
2. The Committee took oral evidence of the representatives of Ministry of
Communications and Information, Department of Telecommunications (DoT) regarding
the comprehensive examination of BSNL and XXXX. At the outset, the Chairman
welcomed the representatives of DoT and drew their attention to Direction 58 of the 60
Directions by the Speaker relating to evidence before the Parliamentary Committees.
Then, the representatives of DoT made a power point presentation on the subject.
Thereafter, the Chairman and Members raised queries on various aspects pertaining to
the subject and the explanations/clarifications on the same were given by the
representatives of DoT. Information on some of the points raised by the Committee was
not readily available with the representatives of DoT. They were therefore asked to
furnish the same to the Committee Secretariat at the earliest possible.
3. The Chairman then thanked the representatives of DoT for providing all the
information on the subject matter as desired by the Committee.
4. The witnesses then withdrew.
(Verbatim record of evidence has been kept.)
The committee then adjourned.61
MINUTES OF THE 12th SITTING OF THE COMMITTEE ON
PUBLIC UNDERTAKINGS (2012-13)
The Committee sat on Friday, the 16th November, 2012 from 1500 hrs to 1645
hrs in Committee Room ‘074’, Parliament Library Building, New Delhi.
PRESENT
Chairman
Shri Jagdambika Pal
Members, Lok Sabha
2 Shri Hansraj G. Ahir
3 Shri Ambica Banerjee
4 Dr. Mahesh Joshi
5 Dr. (Smt.) Botcha Jhansi Lakshmi
Members, Rajya Sabha
6 Shri Janardan Dwivedi
7 Shri Naresh Gujral
8 Shri Mukhtar Abbas Naqvi
Secretariat
1. Shri A. Louis Martin Joint Secretary
2. Rajeev Sharma Director
3. Shri Ajay Kumar Garg Additional Director
Representatives of Department of Telecommunications and BSNL
1 Shri N. Ravishankar Administrator, USOF, DoT
2 Shri R.K. Upadhyay CMD, BSNL
2. The Committee met to take oral evidence of the representatives of the Ministry of
Communications and Information Technology (Department of Telecommunications) and
Bharat Sanchar Nigam Limited (BSNL) in connection with examination of BSNL.
3. At the outset, the Chairman welcomed the representatives of the Department of
Telecommunications and BSNL and drew their attention to Direction 58 of the Directions
by the Speaker regarding evidence before the Parliamentary Committees.62
4. The representatives of DoT/BSNL then made a brief power point presentation on
the subject. During the course of discussion, the Chairman and Members raised
queries on various aspects pertaining to the subject and the explanations / clarifications
on the same were given by the representatives of DoT/BSNL. They also assured the
Committee that written replies to the remaining queries, which could not be responded
then, will be furnished to the Secretariat at the earliest.
(Verbatim record of evidence has been kept)
The Committee then adjourned.63
MINUTES OF THE 14
th SITTING OF THE COMMITTEE ON
PUBLIC UNDERTAKINGS (2012-13)
The Committee sat on Thursday, the 11
th December, 2012 from 1500 hrs to 1630
hrs in Committee Room ‘D’, Parliament House Annexe, New Delhi.
PRESENT
Chairman
Shri Jagdambika Pal
Members, Lok Sabha
2 Shri Ambica Banerjee
3 Shri Shailendra Kumar
4 Dr. (Smt.) Botcha Jhansi Lakshmi
5 Shri Vilas Muttemwar
6 Shri Ponnam Prabhakar
7 Shri Nama Nageswara Rao
8 Shri Uday Singh
9 Shri Bhisma Shankar alias Kushal Tiwari
Members, Rajya Sabha
10 Shri Anil Desai
Secretariat
1. Shri A. Louis Martin Joint Secretary
2. Rajeev Sharma Director
3. Shri Ajay Kumar Garg Additional Director
Representatives of Department of Telecommunications and BSNL
1 Shri R. Chandrashekhar Secretary, DoT
2 Shri S.C. Misra Members (S)
3 Shri J.K. Roy Member (T)
4 Ms. Sadhana Dikshit Advisor (Finance)
5 Shri N. Ravi Shanker Admn. (USOF)
6 Smt. Rita Teaotia Addl. Secretary (T)
7 Shri Malay Srivastava Joint Secretary (T)
8 Shri B.B. Kaura Joint Secretary A)
9 Shri A.K. Garg CMD, BSNL
10 Shri R.K. Upadhyay CMD, MTNL64
2. The Committee held further discussion with the representatives of the Ministry of
Communications and Information Technology (Department of Telecommunications
(DoT)) and Bharat Sanchar Nigam Limited (BSNL) in connection with examination of
BSNL.
3. At the outset, the Chairman welcomed the representatives of the DoT and BSNL
and drew their attention to Direction 58 of the Directions by the Speaker regarding
evidence before the Parliamentary Committees.
4. The Chairman and Members then raised questions on various aspects pertaining
to the functioning of BSNL like their physical and financial performance, tender for
procurement of equipment, enhancement in landline connectivity, effective utilization of
manpower, reviving of BSNL, etc. Explanation/clarification on the same were given by
the representatives of DoT and BSNL. In respect of points for which information was
not readily available with the representatives of DoT/BSNL, they were asked to furnish
the same to the Committee Secretariat at the earliest.
5. A copy of the verbatim proceedings has been kept on record separately.
6. The Committee then adjourned.65
COMMITTEE ON PUBLIC UNDERTAKINGS
(2012-13)
MINUTES OF THE TWENTY SIXTH SITTING OF THE COMMITTEE
The Committee sat on Friday, the 26 April, 2013 from 1000 hrs to
1100 hrs in Chairman’s Chamber, Room No. 147, Third Floor, Parliament House,
New Delhi.
PRESENT
Shri Jagdambika Pal - Chairman
MEMBERS
Lok Sabha
2. Shri Hansraj Gangaram Ahir
3. Shri Shailendra Kumar
4. Shri Adhalrao Shivaji Patil
5. Shri Nama Nageswara Rao
6. Dr. Prabha Kishore Taviad
Rajya Sabha
7. Shri Anil Desai
8. Dr. V. Maitreyan
9. Shri T.M. Selvaganapathi
10. Dr. Janardhan Waghmare
SECRETARIAT
1. Shri A. Louis Martin Joint Secretary
2. Shri M.K. Madhusudhan Additional Director
3. Shri G.C. Prasad Deputy Secretary
2. At the outset, the Chairman welcomed the Members and XXXX to the Sitting of
the Committee.
3. XXXX XXXX XXXX.66
4. Thereafter, the Committee took up for consideration the draft Reports on Bharat
Sanchar Nigam Limited and XXXXX and after some deliberations adopted the same
without any changes.
5. XXXX XXXX XXXX
6. The Committee then authorized the Chairman to finalise the Reports on the basis
of factual verification and present the same to Parliament.
7. As the Committee’s term will end on 30.04.2013, the Chairman thanked the
members for their co-operation in smooth functioning of the Committee during the term
and placed on record his appreciation for the valuable contribution and active
participation of the members in the proceedings of the Committee.
The Committee then adjourned.
XXXX MATTER NOT RELATED TO THIS REPORT.
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