A case for shutting down BSNL

Troubles with BSNL in remote Bihar shows why government being in the business of doing business is a bad idea

India’s public-sector telecom operator BSNL traces its history back to the telegraph days. It’d have also been relegated to a relic of the past by now just like the telegraph, had it not been for the government bailouts and privileges it enjoys. According to Kotak Institutional Equities, its accumulated operating losses had crossed Rs 90,000 crore by March 2019 and it made further losses of Rs 39,000 crore from April-December 2019. Aircel, a private telecom operator had to file for bankruptcy because it had an operating loss of Rs 120 crore, a number that looks meagre in front of BSNL’s losses.

So, what’s the raison d’être for BSNL’s existence? Is it providing access to people who are poor or are in remote areas? If you leave out wired broadband in which BSNL enjoys an unfair advantage over its competitors owing to preferential treatment, that is not the case either. In 2011, TRAI had raised an issue with the then government’s decision to designate BSNL as the executing agency for National Optical Fibre Network (later renamed as BharatNet) but the government went ahead regardless. It was not until late 2017 that private providers like Jio and Airtel were allowed to purchase bandwidth from the fibre network set up by BharatNet.

On what turned out to be a not-so-auspicious occasion of Gandhi Jayanti for me, I applied for a BSNL Bharat Fiber connection which is the only one available in my hometown of Motihari, five hours away from the nearest airport in Patna. I was notified that their sales service would get back to me soon (how soon was unspecified, and intentional now that I think). I received no response for weeks. More than five visits to the BSNL office and three weeks later, a private subcontractor who enjoys a monopoly having been designated by BSNL officials as the contact point, showed up at my door.

For less than a third of subscribers that Airtel has, BSNL has more than 12 times the number of employees that Airtel employs. But it still outsources a lot of its work to subcontractors. The subcontractor demanded Rs 5,500 for the connection while the official communication I had received from BSNL said that I didn’t need to pay in advance for subscription or installation. I was promised installation in four days and when it didn’t happen for over a month, he had a plethora of excuses to explain it. First, it was Bihar polls, then it was Diwali, Chitragupta Puja and Chhath. The onus was always on me to be in contact with the BSNL office and the subcontractor. It took me over 45 days to get the activation email from BSNL and they haven’t yet installed the device. Close to two months on, numerous visits and immense mental tribulations later, I still don’t have a connection. I missed my exams, and now my placement interviews seem to be on a cliffhanger.

In an eerie reminder of the license-raj era, an acquaintance had applied for a broadband connection in the summer of 2016 and hasn’t gotten it yet notwithstanding the fact that he filed several complaints and the DSL service he applied for is itself out of touch with the fast-paced technological changes now.

Anecdotes tell me that it would have been a different story had I been in a position of power. BSNL officials apparently do this at the beck and call of a politician or a bureaucrat and that partially explains the enduring charm of the good-old IAS among the educated youth in the Hindi heartland. Compare this experience to my Airtel DTH service which on registering a complaint, sends a representative to rectify any issue within 45 minutes. The marketplace provides, and any discrimination has a cost unless you are an inefficient government-owned company being bailed out on hard-earned taxpayer money.

It would be a mistake to think that this is an isolated event or that the problem is confined to just BSNL. It’s not that people working at BSNL or at other PSUs are essentially bad or lazy people. The problem is that they are working under a bloated bureaucratic system that doesn’t incentivize competence or customer service.

Those who oppose privatisation of PSUs claim that the government turned BSNL unprofitable by opening the sector up and giving into the private sector. But BSNL was profitable only till it enjoyed an effective monopoly of the sector with the help of state patronage. The company has not made a profit in any year starting 2009-10. The real telecom revolution in India happened after private companies took mobile connectivity to the poorest of Indians in the remotest of villages.

Last year, the Government of India merged BSNL and MTNL and bailed the entity out with approximately Rs 70,000 crore of taxpayers' money. If you just account for the 5.65 crore income taxpayers of the country, that would amount to upwards of Rs 12,000 on an average income taxpayer. But even a daily wage labourer pays a tax when he buys anything that has GST levied on it. So an average Indian, be it a user of Jio or Airtel, paid Rs 550 to sustain BSNL & MTNL last year.

The current Prime Minister has invoked Gandhi’s Talisman multiple times while speaking in the public fora. Would Gandhi approve of the inhumane nature of this state subsidy that uses the taxes collected from the poorest of the poor to protract the eventual crumbling down of the inefficient public telco? I don’t think so. Notwithstanding your political convictions, shouldn’t you be opposing this atrocity? Should this money be either left in the hands of the people by reduction of direct/indirect taxes or be better invested in education or health? Budget allocation for a particular year, unlike voluntary exchange and free trade, is a zero-sum game.

The government that was elected first on the premise of “minimum government, maximum governance” has been more than happy to flush money down the drain by bailing out BSNL (and countless other poor-performing public sector firms). Only words proclaiming the government has no business being in business wouldn’t do. Actions from the central government need to speak, and they need to speak louder than PM Modi’s words. Close it down or sell it off but don’t waste our money on this monstrosity further. Most consumers have already done it, now it is high time that the government hangs up on BSNL!

(Akash Kumar is a final year student at IIT Madras. He also leads academic programs for Students for Liberty in South Asia)

Disclaimer: The views expressed above are the authors’ own. They do not necessarily reflect the views of DH.