India’s state-run telco, BSNL, hasn’t only lost wireless market share to private telecom operators due to the unavailability of its 4G service but is now constantly losing out to Bharti Airtel and Reliance Jio on lucrative the government-funded digital connectivity programs for unconnected villages.
However, these rural connectivity programs are still facing delays and other challenges despite private telcos winning the mandate to deploy the network, according to a report by the Economic Times.
Bharti Airtel and Reliance Jio recently won Northeast – I and Left Wing Extremism (LWE) -II programs worth Rs 1,255-crore ($165.13 million) and Rs 2,211-crore ($290.92 million) to deploy 1,511 and 2,542 telecom sites from the Department of Telecommunications’ (DoT) Universal Service Obligation Fund (USOF). The department had set a rollout deadline of 18 months for both programs.
The USOF is a Rs 58,000-crore ($7.63 billion) reserve to fund rural and remote digital connectivity. Indian telecom operators have to pay 5% of their adjusted gross revenue (AGR) towards the USOF levy.
The Northeast-I connectivity program was initially secured by BSNL but in 2019, the Digital Communications Commission (DCC) annulled the contract. The program aims to provide connectivity for development purposes of the North-Eastern region of the country which comprises various states.
The USOF recently awarded a 4G-based connectivity program with an outlay of Rs 6,466-crore ($850.79 million) to Airtel and Jio, operators. The program covers villages in the aspirational districts of Andhra Pradesh, Chattisgarh, Jharkhand, Maharashtra and Odisha.
With these wins, the total value of projects given to Airtel and Jio reached Rs 12,850 crore ($1.69 billion).
Previously, the USOF awarded mega projects to private telcos as well including a contract to Jio to cover 354 uncovered villages and subsequently to deploy 889 sites in Meghalaya to Bharti Hexacom in 2020.
The report added that BSNL has raised the issue multiple times and sought immediate intervention from the DoT secretary.
BSNL’s chairman Pravin Kumar Purwar said that the state-run telco is in the best position to complete the connectivity program within 24 months from the date of the contract award. He said that BSNL has the past experience of rolling out mobile networks in difficult terrains with complete professionalism.
The report claimed that BSNL didn’t bag a single mobile project in the last five years and all USOF projects were given to Airtel and Jio in the name of open tendering.
“The department adopted a regressive strategy which is not only worrisome for the state-run telecom provider, but is like a free pass to private companies to have an infrastructure ownership in a bid to suffice their 5% contribution towards the USOF,” an industry source was quoted as saying by the publication.
The report added that concerns are now being raised over these contracts to private telcos due to the poor progress of programs. Additionally, the report, citing industry experts, said that demand is being made for scrutiny from “top echelons of the Centre” due to the involvement of strategic locations including China-bordering areas, especially when private telcos have deployed equipment that is imported.
Rakesh Kumar Bhatnagar, former advisor – Technology at the Department of Telecommunications told the publication that the programs now pose “a great national security risk” with equipment procurement from foreign sources. “Life of the equipment and unpredictability when a supporting nation becomes a hostile one over a period, are the areas of concern…it would be an unpleasant surprise, if in the audit exercise, it is found that many sites were claimed to be operational and as of today, would have no coverage even though the government’s fund was claimed,” he told the publication.