New Delhi: The board of directors of state-owned Bharat Sanchar Nigam Ltd (BSNL), India’s largest telecom company, which on Monday had suggested halving a controversial mega purchase of cellular equipment, has stopped short of removing the so-called third generation or 3G gear from the contract.
In doing so, it has not acted upon a missive from communications and information technology minister A. Raja that fresh bids be invited from telecom vendors for the purchase of 3G equipment, which enables high-speed data access on mobile phones. The BSNL board, in its response to Raja’s queries, noted that it was legally difficult to change the specification of the equipment, sought to be procured, midway through a process that began early in 2006.
“The tender does not have any clause by which technical specifications can be changed (to exclude 3G from the contract). In the absence of such a clause, any revision of technical specifications will be a ground to challenge the process before a court of law,” the board noted in the final minutes of its meeting on Monday.
“If the technical specifications cannot be changed, the issue relating to financial rebidding among all the bidders does not arise,” it said.
Raja, who had taken over the communications and IT portfolios in May, had in a letter earlier this month sought to know why BSNL had disqualified US supplier Motorola Inc. from the tender and asked why the 3G part of the contract not be scrapped and fresh bids invited from all the vendors, including Motorola.
He had noted that the US company had agreed to supply similar 2G and 3G equipment at $69 (Rs2,787.60) a line to state-run Mahangar Telephone Nigam Ltd (MTNL).
Against this, under BSNL’s tender process, Motorola was disqualified and European manufacturers Ericsson LM and Nokia Siemens Networks were selected to supply the equipment at $107 a line.
At Monday’s BSNL meeting, board members agreed that the two contracts are not comparable to each other. “The tenders of BSNL and MTNL are significantly different in their scope of supply, area of operation and network features,” it noted. “In fact, the BSNL prices are cheaper than MTNL if all the additional factors are included.” A significant portion of the new capacity to be added by way of the purchase, a senior BSNL executive said, would be in rural areas. The executive declined to be identified since a final decision on the purchase is yet to be taken by the minister.
So, even as the BSNL board decided to trim the 45.5 million-line tender to 22.75 million, it retained 3.5 million 3G lines within the contract so that it is ready to roll-out the service, which can support high-speed Internet access, email and video applications, when the regulatory rules for the service are finalized by the government.
“If we had scrapped the 3G component from the first phase, we would have been behind the private players when it came to taking advantage of the business opportunity once the government came out with its policy on the same,” the BSNL executive said. “Bringing out a fresh tender and installing capacity takes no less than a year,” he added. The department of telecommunications (DoT) has missed an April deadline for announcing 3G rules and looks set to miss a July target it had set for itself.
Also, the BSNL board suggested that the purchase orders on the 3G lines be issued only after the government comes out with its policy on allocating spectrum for such services.
Under its plan, BSNL had planned to roll-out 3G networks in 500 cities across the country in three phases under a 62-million line capacity augmentation plan. While 45.5 million lines, including 3G-enabled ones, were to be installed by vendors chosen under a tendering process, the remaining are to be installed by the government-owned ITI Ltd in collaboration with its technology partner Alcatel-Lucent. The first phase of 17.5 million lines, including 3.5 million 3G lines, would have covered all the district headquarters, commercial and tourist centres, BSNL executives had said earlier.