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Reviving BSNL-MTNL Makes Social & Business Sense

Trust Reliance Industries to create fabulous slogans each time they plan something big. Many of the new millennials may not remember “Kar Lo Duniya Mutthi Mein” from winter of 2002 which kickstarted the telecom journey of India’s largest business house. What began then as a 2G journey is now shifting gears as Mukesh Ambani is now pitching for a “2G-Mukt India” in the shortest possible time-frame.

In a recent statement, Ambani said that Reliance Jio is committed to including the 40 crore 2G customers in the Digital Indian ecosystem while providing the best and most affordable service for all of its existing customers. And how so? By increasing tariff on its services after their close competitors announced their intention of doing so to ward of liquidation in a market that was spoilt silly by Jio’s freebies.

So, where does it leave the government-owned entities that recently got merged and is currently chopping off the flab in terms of human resources by the thousands through a VRS scheme valid till early December. Wire agency PTI quoted un-named BSNL officials to suggest that just over half the total 1.5 lakh employees have taken the pink slip, an exercise that could save them Rs.7,000 crore annually.

At the same time, another report from wire agency PTI using TRAI data suggests that Vodafone-IDEA and Airtel are losing subscribers aplenty. Total wireless subscribers grew 0.23% in September over August but the two cellular operators lost 49 lakh subscribers in the period, mostly to Reliance Jio and surprise… surprise… to BSNL!! The latter added 7.37 lakh new customers in September.

Which now begs this question – Isn’t it the government’s job to ensure quality infrastructure at reasonable costs to those living in the rural and extremely backward areas of the country? For e.g. doesn’t the government (state and central) fund village roads while allowing private participation in the national highways through the PPP route?

At a time when the oldest players Airtel and Vodafone-India are reeling under heavy debts and penalties, following the SC ruling on adjusted gross revenue (AGR), wouldn’t it be in the fitness of things for the State to retain its hold over the ambitious “Digital India” project which suddenly has found resonance with Reliance Jio through their latest statement, the gist of which can be found in the paragraph below:

“Despite the staggering growth in data-consumption and 4G coverage across the country, there are still over 40 crore Indian consumers who have not benefitted from the advent of the latest technologies. We believe that the ambitious objectives of the ‘Digital India’ mission can be achieved only if India is made “2G-mukt” in the shortest time-frame possible… “The government and TRAI should mandate this through policy. This requires continued investment at an industry level.”

Ahem! Does this mean that Reliance Industries wants to have its finger in the rural pie as well? The answer is quite obvious because that’s where the moolah would lie when 3G and 4G replaces 2G across Mofussil Bharat and one can easily expect users to spend ten and twenty rupees to watch movies and songs online – which is why Jio has been playing the content aggregator’s role in the first place.

Should the government hand over the entire pie to a private player or continue to keep its hand on the tiller? The answer would depend on the side of capitalist ideology that one subscribes to. The extreme right would say that government has no business running any business. The far left would view it from a diametrically opposite lens.

The rest of us who make the mainstream would worry about rendering 1.5 lakh people jobless and how with a bit of effort government can create a cheap and reasonably valuable brand around the entity created through the merger of BSNL and MTNL. In fact, it could be a golden opportunity to push ahead with the Digital India campaign minus private participation, without selling or pawning the family silver.

The Trust Factor of BSNL

Telecom Minister Ravi Shankar Prasad made the right noises earlier by suggesting that government plans to invest close to Rs.30,000 crore to revive the BSNL-MTNL combine. That’s a good start, but, as always the devil happens to lie in the details.  How would the government go about the task? More specifically, who would carry it out and where would the money be spent?

Per BSNL’s annual report for 2017-18, the company has 111.85 million broadband connections and 124.11 million telephone connections – both accounting for about ten percent market share besides accounting or 50 percent of the total broadband segment (a number that should’ve fallen sharply since). Visit any village in the hinterland and it’s only BSNL that functions seamlessly whereas others start sputtering.

Given this level of trust, it wouldn’t be difficult for government to push the brand value deeper and offer 3G or 4G services and digitally connect India as Prime Minister Narendra Modi dreamt and spoke about several times. And this is where perhaps the government can use the extra cash it will save post the VRS exercise. Invest in technology, infrastructure and even hardware if they can tie-up with enterprises manufacturing mobile handsets at their factories in India. This is Make-in-India in action!

Say No to Hegemony

There is a far more important reason that highlights the need to revive BSNL. With Vodafone-IDEA and Airtel gasping for breath under the government’s penalties, there would be only Reliance Jio left in the equation in case the other two fail to get oxygen in the form of improved revenues through hiking customer fees and temporary respite from government to pay their dues.

Such a hegemony doesn’t augur well for any business. Not because, Reliance cannot afford to acquire the assets of its rivals or that it cannot provide quality service, the reason competition is preferred by every proponent of a free-market economy is that it is this competition that keeps enterprises on their toes and ensures that customers get the best that money can buy.

Reliance has indeed played a prominent role in boosting India’s digital economy through enhancing mobile telephony at throwaway prices and creating multiple businesses linked to the smartphone, connecting customers seamlessly and helping their purchases through algorithms developed by analytics. To say that today Reliance is the Google of the Indian economy wouldn’t be an understatement.

However, this is where policy makers need to keep their eyes open. Hark back to 2016 when Reliance dedicated its mobile telephony to “1.2 billion Indians via a newspaper advertisement with Modi’s picture. The message was loud and clear and left many questioning the possibility of a nexus between government and Reliance Jio and how Digital India had suddenly become a private entrepreneur’s brand? There were questions around whether Jio was looking to monopolise India’s telecom sector.

With two of the existing players on life-support, it looks like there would be no stopping Reliance Jio from taking over India’s telecom. Unless, the government wakes up to its fundamental duty of protecting its citizens – not just from external threats but from internal ones that could burn a hole in the pockets of the poorest of the poor through monopolistic pricing in the none-too-distant future.

For that to happen, one needs to wait and see whether Prime Minister Modi could walk the talk and keep developmental welfare as his team’s focus or whether they’d slip into crony capitalism and prove Rahul Gandhi’s “Suit-Boot Ki Sarkar” comment, albeit unintentionally.

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