India Telecom

January 15, 2004
BSNL to cover highways, bring cellphones to villages

NEW DELHI -- Public sector telecom service provider BSNL is planning to procure an additional 10 million GSM cellular lines to cover all highways and even penetrate to villages with mobile telephones, according to Telecom Commission member (services) P.K. Chanda.

Speaking recently at a press conference, he said that the rural teledensity would be much closer to 3 percent by 2005, while it was 1.35 percent now. He saw great future for fixed WLL in village environment particularly for the indigenously developed CorDECT. He expected the 25,000 remote villages to be connected with satellite, and BSNL to cover 2,600 short-distance charged areas (SDCAs) by next year.

He agreed with the complaint of a participant that telecom hardware output was not going up despite the growth of the telecom services sector. Manufacturers, including ITI, were being reduced to trading as profitability had gone down, and some of them were on the verge of going to the BIFR, as free import was being allowed.

Commenting on the profitability of BSNL and MTNL, he agreed that unless the excess manpower at lower levels was reduced, this would not go up. Earlier, in his special address, telecom expert Dr. Mahesh Uppal pointed out no other incumbent operator in the world had lost money, except in India. Here, both BSNL and MTNL are incurring losses. Although following liberalisation, incumbent lost market share, the increased volumes were compensating it for this loss. "Why is it not happening in India?," he asked.
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One reason for this loss was the 1.17 crore rural lines. In urban areas, the cost per line was Rs. 423 per month. However, in rural areas, it was receiving only Rs. 110 per month, which meant a loss of Rs. 300 per line per month. He estimated that BSNL was losing Rs. 4500 crores. It had already received subsidy of Rs. 2300 crores. BSML was also burdened with many taxes and pension for its own as well as for MTNL's employees who are on deputation to it. Pension alone takes away Rs. 1000 crores from its revenues.

V.P. Sinha, director, marketing, BSNL, pointed out that in industrial pay to BSNL employees alone, the company had to shell out Rs. 4000 crores as arrears for three years. In spite of all that, the revenue rose by 5 percent. He expected that next year it would go up by another 8 percent to 9 percent.

He added: "Increase in volume is giving us revenue. Though Rs. 4,500 loss was suffered volume would go on rising and compensate. Market is so large that despite market share of BSNL decreasing, its revenue was rising. One good feature was that the idea of using village postmen to provide mobile PCOs with GSM phones has proved very popular. We are unable to meet the demand." As for broadband, BSNL was prepared to provide franchise for it from its exchanges.