Government of India plans to give 4G-suitable spectrum in three LTE bands to BSNL and MTNL as part of a plan to revive their operations, Minister of Communications Ravi Shankar Prasad announced on Thursday.
Prasad said the two public sector companies have requested spectrum in the 800 MHz, 1800 MHz and 2100 MHz bands to launch 4G services.
The government is preparing a revival plan for the two loss-making public sector units on the basis of recommendations by the Indian Institute of Management, Ahmedabad and international consultant Deloitte, he said.
“The above said requests [for spectrum] have been included in the revival plan of BSNL and MTNL,” Prasad said, referring to the request for the spectrum.
In 2010, BSNL and MTNL became one of the first telecom operators to get hold of 4G spectrum after they were given the airwaves without having to participate in the auction.
However, the two companies, which were already struggling due to various factors including legacy technology, mismanagement and political interference, could not take advantage of the spectrum allotment, and did not launch 4G services for the next eight years.
Meanwhile, private operators — particularly Reliance Jio — used similar spectrum to launch a pan-India, low-cost wireless voice and data service.
The price of data crashed from about Rs 250 per GB to about Rs 3.5 per GB, hitting both BSNL and MTNL hard.
Enticed by low prices of Rs 150-250 per month, many of BSNL’s landline customers — who were paying Rs 750-1,350 for broadband — switched over to 4G operators like Jio.
BSNL, which had managed to bring down its losses to about Rs 4,500 per year from around Rs 9,700 cr in FY12, again started its losses increase to almost Rs 8,000 cr in FY18. In the year ended March 2019, it sustained a loss of Rs 7,700 cr.
Having realized that it would be impossible to compete with Jio, Airtel and Vodafone Idea using legacy technology like 3G and DSL, BSNL and MTNL now wants to invest in fiber optic, 4G and 5G services.
Employees of BSNL and MTNL too have changed their attitude and behavior towards customers in the last four-five years.
Thursday’s statement by Prasad indicates that the government is not keen to let the two companies, which employ about 2 lakh people between them, go bankrupt, without giving them one more chance.
LEGAL COMPLICATIONS
However, Prasad also hinted that the allotment of 4G spectrum to BSNL and MTNL may not be as easy as it was in 2010.
In 2012, the Supreme Court came down heavily upon the then UPA government for giving away spectrum to telecom operators without charging them the full market price for the same, and directed that such precious natural resources cannot be handed over to companies on the whims and fancies of ministers.
Even though BSNL and MTNL are not private entities, Prasad seemed to indicate that the government did not want to be dragged to court by private players over ‘free’ or ‘administrative’ allocation of spectrum to BSNL and MTNL.
“In view of the Hon’ble Supreme Court judgment dated 02.02.2012 in 2G case, the matter of administrative assignment of spectrum has also been referred to the Ld. Solicitor General of India for his opinion,” Prasad said.
Currently, BSNL has around 6,000 4G base stations, or about 0.5% of the total 4G base stations in the country, while MTNL has none.