MILKING A SHRINKING BSNL

Till 1975, the Posts and Telegraph(P&T) department of the government of India was the sole provider of telephony in India, when the telephony part of the business was hived off to the Department of Telecom(DOT). In 2000, the DOT was symbolically corporatized by another change of name, which gave birth to the Bharat Sanchar Nigam Limited(BSNL), now the government’s telecom baby for the whole of India except Mumbai and Delhi which are provided these services by the Mahanagar Telephone Nigam Limited(MTNL).

Before the ‘phone revolution’ began in 1995, the Government of India was the sole provider – or should we say denier – of telephones to a hapless nation. Getting a telephone connection was so difficult that the mere possession of one was flaunted as a status symbol, much like a Vertu mobile phone is these days. The waiting list itself was 10 years or more in most cases to get a humble rotary dial instrument.

More frustrating than the waiting list was the extraordinary culture that was pervasive in the P&T/DOT. At every step, nothing moved without paying some sort of a bribe. Even after your phone was finally sanctioned, the guys who laid the line to your house had to be rewarded. Then of course was the all-important lineman who actually put ‘life’ into the instrument after keeping you on tenterhooks for some days. That allowed you to perfect the art of smartly picking up the handset of a dead phone and proudly announcing that you had arrived, well before there was somebody to hear you at the other end!

That was only the beginning of your permanent ‘affair’ with the department. The lines were always mysteriously programmed to go dead, often without any visible reason, and almost always after rain or a strong breeze. That was the time when everyone in the chain, from the lowest to the highest that you could get with great difficulty on the phone, got the opportunity to show you how powerful and arrogant they were, and how they were doing you a great favour by putting life back into your instrument. After days, if not weeks. And that too only after you had bribed at least the linesman who self-importantly came to first check you out on the pretext of checking the instrument, and then to activate it later depending upon your ‘response’!

It is hard to believe that currently more telephones are being added in India every month than were added by the government in 50 long years! You would imagine that BSNL would be shaken to its roots by this revolution and the mostly excellent service being provided by privately owned telecom companies in a fiercely competitive environment. You would also imagine that the corporatized behemoth would have by now shed its typical lethargic government culture and started providing matching service to its clients.

But, no. BSNL employees still behave like the disinterested officials they always were. In fact they appear to be more frustrated than they ever before. What do you expect from the poor guys who now have to survive on their salary alone, thanks to the Airtels, Relcomms and Vodafones who have hit them where it hurts most? Now, hardly anyone comes to them for a new connection where the services of other companies are available.

The top management of BSNL may be taking out glitzy advertisements to attract new customers, but at the ground level there are sullen faces hurt at being pushed around by demanding customers. And yes, even today, for every small thing like changing a plan, for example, you are required to locate and go to an unwelcoming BSNL office or telephone exchange and give a phsyical application. Nothing is done online or on phone, and applications are sometimes lost or remain unactioned.

They also still have one old ace up their sleeve, to relive the old times of importance, if not money: old connections and broadband going dead. Those who are continuing with their old landlines of BSNL know what it means when that happens. You dial a helpline many times to listen to a pre-recorded voice followed by music but no human voice. Finally, you get to hear the first disinterested BSNL employee, pulled out of a siesta or a game of cards, who grudgingly notes your complaint. Then starts the long wait, interspersed by more frustrating calls to the helpline. Finally, after a couple of days, you get a call on an alternate number that you have given, enquiring whether you had lodged a complaint and imperiously informing you that it will be set right. Some favour being done! Then, with some luck, it is set right, but you can never predict when.

If you want the job done in a hurry, which means in the same time frame that a private operator does it automatically, well, you have to be smart enough to recall the old bribing P&T/DOT days in a hurry, or dump BSNL altogether. The latter is exactly what is happening wherever users have a choice. Soon, that choice will be available in the small towns and cities where BSNL still rules. Will that development change its culture? Ha!

With the commies having been shed, the government is finally planning to go ahead and disinvest around 10 per cent in the company and come out with India’s largest public offering, an IPO of Rs40,000 crores. The unions have predictably seen red, but their opposition is being taken care of by a generous issue of shares to employees.

The government, pleasantly surprised by the overall explosive growth of telephony in the country, is belatedly somewhat concerned about the slow growth registered by BSNL. Does it not know why? If the government gives its own many departments the freedom to chose their service providers and not continue to suffer BSNL, even that slow growth will actually turn into rapid decline.

Relative to its competitors, BSNL is actually shrinking. Why?

BSNL is fiercely resisting the changes that are sweeping across the telecom sector. It is zealously preserving its stagnating, disinterested and almost imperious P&T culture that is typical of all government run monopoly businesses. When heads cannot be made to roll and jobs are not on line if people don’t perform, this is exactly what happens. Minority disinvestment will get the government a lot of money one time. That is not going to improve the health of BSNL or change the attitude of its employees.

The case of another similarly stagnating outfit, VSNL, shows us the kind of growth that can be achieved by a government company after it goes into professionally managed private hands. See what the Tatas have done to that company after the government sold majority stake to them. With the same employees who were under-performers when it was nobody’s baby as a government outfit. They have quickly adapted to a totally new culture based on performance and accountability, in an environment of excellence.

That is the way for BSNL to go too, if it does not want to continue to shrink and sink. Will the government let it before it does? Or is it just interested in milking it through an IPO before its valuation inevitably tanks?

MOBILE TELEPHONY: UNSHACKLED INDIA ZIPS PAST US

Sometime in March 2008, the ‘phone revolution’ that began in India in 1995 with the launch of commercial mobile telephone services, achieved a landmark that no one in India would have thought was possible. During the month, the total number of mobile phone subscribers in India exceeded those in the US, to make India the second largest mobile market in the world, next only to China.

With a record addition of 10.16 million subscribers in March 2008, India had 261.1 million wireless subscribers as on March 31, against an estimated 257.9 million in the US. Just 12 years back, India had a zero mobile phone base. A little over five years back, in December 2002, the total number of mobile subscribers were only 10.5 million; now almost that many are being added on a monthly basis!

In 1991, economic reforms were initiated in the country to break it free from the crippling stranglehold of politicians and bureaucrats who had discovered that socialism was the perfect mantra with which they could amass undreamt personal fortunes under the guise of helping the poor and punishing the rich, with the latter being projected as immorally exploitative and anti-poor.

That year, the total number of telephones in the country was a mere 5.07 million! How dramatically the scenario has changed since then.

Then, a telephone was made to look like a ‘status symbol’. You had to apply for and book a telephone almost before your child was born because the waiting list to get a phone was as long as 10 years! If you wanted it faster, a deposit of Rs10, 000 had to be made with the government’s Posts and Telegraph Department. The fun did not end there. After a phone was finally sanctioned by an arrogant and often greedy official blatantly displaying his power, it was the turn of the lower staff to extract their pound of flesh. They would lay the line into your office/ residence only after they were rewarded. Then the line would lie dead till you paid to another lot who would activate it so that at last, exhausted but exhilarated, you could make that call which announced your arrival into that exclusive club of those who had a phone! Then, of course, would start the repetitive ‘line dead’ mysteries. For no reason, phones would go dead and would return to life only if you bribed the government employees paid to do the job; unless you knew somebody important enough in the government or a policeman. Then the job was done for free and the line also rarely went dead after that.

Now, fierce competition has ensured that companies are falling over each other to give phones and additional services at the cheapest rates in the world. The death of distance is now a reality. A call to any place in India can be made for as low as 40 paise, 10 cents, a minute, and the rates are still falling. Earlier, when India’s politicians and bureaucrats were working overtime to draft mind-numbing rules and regulations to give dishonest lessons to their countrymen about the virtues of socialism, peak charges per minute were Rs42, i.e. more than $2 at the then prevailing exchange rate. That is if you were able to get through on the line in the first place! That dismal scenario spawned another income stream for officials who, for a fee, let preferred clients make calls ‘free’ by either technical tinkering or by debiting their bills to other often unsuspecting subscribers.

The unshackling of the competitive ability and spirit of Indians, long stifled under the uncompromising and failed tyranny of socialism, has yielded results that were almost unthinkable even a decade ago. The explosive growth of mobile telephony in India is one more dramatic example of what the country can achieve if only it is set free of the corrupt whims of ignorant politicians and self serving generalist career bureaucrats. Fortunately, milestone achievements like this one are acting as a sort of “Push Model” to more than nudge entrenched mindsets and empires in the government to change and learn to flow with the current of economic progress that is gaining momentum with each passing day.

But, even pushing leads to some loss of time and momentum, something that should not be acceptable. It is only when such retardants are finally pushed aside into the irrelevance where they should have been to begin with, will India move ahead at full throttle and realize the potential of its economic strength and creative genius. The sooner that happens, the better for India.

For now, it is time to savor the spectacular success of India’s mobile phone industry as India zips past the US in numbers, and look forward to the day when the same happens in tele density as well. Chak De India!