Free SMSes may have cost BSNL crores

Free SMSes may have cost BSNL crores

New Delhi: Bharat Sanchar Nigam Ltd (BSNL) may have lost anything between a few hundred crores and several thousand crores since 2008 by not charging other telcos for telephone messages or SMSes carried on its network.

According to two officials at the state-owned telco, two senior officials from the department of telecommunications (DoT), and documents reviewed by Mint, BSNL hasn’t charged other telcos for using its signalling system for sending messages because it is yet to decide how much to charge.

“As per the agreement between BSNL and private operators, BSNL is entitled to charge" for these, said one of the DoT officials, who, like the others mentioned above, didn’t want to be identified. “But for the past three years, BSNL has not been able to decide on amount to be charged from the operators."

The charge is similar to the interconnect charge levied on phone calls originating on one operator’s network and terminating in another’s. India’s telecom regulator Trai (Telecom Regulatory Authority of India), which oversees the so-called interconnect regime, doesn’t prescribe an interconnect charge for messages. Some operators choose to levy one; others don’t. Details of which do and which do not are hard to come by because interconnect agreements between telcos are confidential. Mint has reviewed the copy of one such between BSNL and a private telco, though, and this says that the state-owned telco will charge for the use of its signalling system to transmit messages—once it decides how much it wants to charge.

BSNL has the most extensive terrestrial telephony network in India, mostly copper-wire, and unlike voice calls made on cellular phones that literally travel over air, messages, especially those between cities and towns, often complete part of their journey on copper. And where there is copper involved, BSNL usually is.

BSNL originally decided to charge for the messages in 2005. It didn’t do so for three years because it had no way of finding out the volume of message traffic it was carrying. Between 2005 and 2008, it invested 150 crore on equipment that could help it assess this volume, said one of the BSNL officials mentioned. Since then, it hasn’t done anything.

A detailed email questionnaire sent to BSNL chairman R.K. Upadhyay and phone calls to his office remained unanswered till late Monday evening.

One internal BSNL document reviewed by Mint says the telco can begin charging for the service once it decides to; another, assessing the viability of the project to instal the volume-tracking equipment says that across 300 so-called links, the telco can generate 105 crore a year from carrying messages (at the rate of 10 paise each). BSNL has a total of 22,000 of these links across India.

A second BSNL official said the number could be higher because the estimates are based on 2008 data. The volume of messages has gone up, he added, and the telco could have lost up to 7,200 crore. “Despite the systems are in place, BSNL is not able to charge the private operators because there is no policy decision on what charges to be levied," he said.

A third BSNL official insisted that discussions on charging an interconnect charge for messages were “in progress".

A technical expert working with the India arm of one of the world’s largest technology firms said that the cost incurred on transmitting messages is likely to be nominal. BSNL is within its rights in wanting to charge for this, added this person who did not want to be identified, but it first needs to calculate the actual cost it incurs. “Private operators are using 3-4 paise" for this service, he said.

Rajan Mathews, director general of industry lobby Cellular Operators Association of India, said BSNL’s intent to charge for this service was “ridiculous". The telco would incur a cost just over zero paise, he added, and it is already charging exorbitantly for (interconnecting) voice calls, he added.

BSNL’s revenue has fallen from 40,177 crore in 2005-06 to 32,045 crore in 2009-10 and for the first time since its inception, it posted a loss of 1,823 crore in 2009-10.

Shauvik Ghosh contributed to this story.