Will golden era return in Telecom and Aviation sectors, in India?

In recent years two sectors which were really profitable and source of employment had lost the charm are telecom and aviation. India was the place where new players were interested in these two sectors. While in Telecom entry of RJIO and cut throught competition has not only killed number of telecom companies but also eat up the jobs in the sector. Although in the aviation sector various factors are responsible for the low margins, competition to provide cheap services to customers is  one of the reason. On the other hand sharp rise in crude oil prices also also affected balance sheets of the airlines.

On the other hand telecom sector is not affected by international factors rather it is stressed only because of the pressure to provide cheap services after the entry of RJIO which is having a business model different from all other telecom players. It is interesting to note that RJIO is venture of reliance industry owned by Mukesh Ambani, who has diversified businesses and RJIO is like a catalyst to other sectors in which Mukesh Ambani has invested like e-commerce, AJIO.COM and media company Network18 , Reliance trends, JIO TV, JIO money ,Reliance retail .

All other telecom players are only dependent on the income from there telecom business while Mukesh Ambani led Reliance industries has bucket full of businesses. This is the one of reason RJIO subsidized JIO mobile phones witch RJIO distributed at throwaway prices of Rs. 500 only.

While two major airlines, Kingfisher and Jet airways has to close their businesses in India in Telecom sectors many operators has to shut their business an two big operators VODAFONE and IDEA has to merge their business for survival .

Although rest of the players in aviation sector are doing their business smoothly this is not the case in the telecom sector .Here except RJIO All the other operators are making losses and budened with large amount of bank loans thus affectiong their investment in the sector in  new technology . Earlier Government was claiming that India will   launch 5G with other countries in the world , the poor balance sheets of Indian telecom players definitely won't allow them to go for 5G Spectrum bid . 

Recently news broke out in India that Vodafone may exit telecom market in India due to critical financial condition .As soon as Government noticed this,announce  relaxation for two years to pay due AGR to DOT.

Two improve balance sheets already telecom operators has declared to raise the tariffs from December 19.It may assumed that the tariff war in the telecom sector is over and consumers has to pay extra bucks for telecom services in coming days. Now on wards it will be interesting to see the change in business model by telecom operators to stay in market against RJIO which has already taken a leap while establishing world class notwork ,to planning next generation network with IOT and Artificial intelligence. RJIO is also focusing on producing its own content like Netflix and Amazon prime. It will interesting to see can Netflix and Amazon prime will face the similar heat like other telecom player felt with the entry of RJIO in the market.

Future  of Aviation sector in India

Although the competition is high in aviation sector but the potential to grow business is very high, as Government is looking to connect small cities with flights and opening new airports with investment from private companies. With large scale of inland routes their is very much potential in India. 

Future of telecom in India

Although last few years were very disappointing for old telecim players due decreasing revenue, ARPU from customers has started to increase by implementing fixed minimum monthly recharge. Recent judgement from Supreme Court regarding payment of due AGR by operators has further hit balance sheets of the companies, although Government provided partial relief by extending the deadline for two years. Vodafone- Idea has announced to raise the tariffs by 42 %from 3rd December, followed Airtel and Rjio. 


Although it seems an end to price war in Telecom but Rjio has again shown its intention to enter into fierce competition in fixed wireline broadband or FTTH. Rjio already launched its ftth back in September but not got good response. To achieve its target customers Rjio recently  launched low cost ftth with starting price of 349 and 300 GB data at a speed of 10 Mbps, thus it became cheapest ffth service avilable in the market. 

Definity BSNL will also the tariffs because of its decreasing revenue and accumulated losses. Now it is interesting to see how Government will stop operators to raise tariffs further in future, as Government was of the view that telecom services should be cheap when Rjio started telecom  services at throwaway prices. 

BSNL revival ,A challenge for the Government and the organisation

Bharat Sanchar Nigam Limited , formed in the year 2000 from its parent Department of Telecommunications(DOT) to give level playing field to private telecom operators. Initially BSNL was allowed to work in wired line communication only, while private players were working in mobile communication. But the very motive of Government to make communications services available to every citizen was not being taken care by private operators .Private operators were spread there in all major cities and places where high revenue generation was there leaving remote and rural areas . In 2005 BSNL launched mobile services to fulfill to motive of government to make mobile services accessible to every citizen ,with special focus on rural services. BSNL opened rural exchanges as well as installed mobile towers in rural areas.

Whats Wrong In Opening new exchanges and Mobile Towers

While BSNL earn huge revenue from opening new exchanges and Mobile towers because of high tariffs in landline as well as in mobile in early days, but substandard work in cable laying (no proper depth) caused increased maintenance cost of its Landline services due to frequent damages in development work of water and road.slowly tariffs were reduced in mobile , followed by Landline thus reducing its revenue . When private operators strengthen their network in cities , BSNL failed to upgrade network due to dependence on DOT and Communication ministry .While BSNL is having good number of rural towers , in cities it is far  behind private operators.

Why BSNL is a failure in spite of huge resources?

Although BSNL has played very important role to fulfill social obligation of Indian Government, but it has failed to grab the business opportunities in spite of huge infrastructure and resources. When we talk about BSNL it is not like any other PSU or private company. BSNL is formed from DOT to give level playing field to other operators but with dependence on DOT and Communication ministry for any important decision. While BSNL was not allowed to expand and modernise its network on the pretext of national security , burden on exchequer etc. private operators took a lead with timely upgrading their networks. This not only caused decline in market share of BSNL but also poor image among customers.

What are the structural weakness in the BSNL?

In the 2014 when new Government elected and Shri Rvishankar Prasad was given portfolio of Telecom minister he was very keen to appoint a competent CMD from open market to lead the PSU to new high, but no business leader was ready to take the charge due to complex structure of the PSU.What were these complexities lets have a look:

1. At all major decision making positions officers working were ITS recruited by DOT which were not absorbed in BSNL, their future is secured by DOT and totally independent of the fate of BSNL.

2. Most of the employees were recruited to work in legacy network of Landline  and to upgrade skills of these employees was not easy.

3. No specialized recruitment by the PSU for specific roles. Most of the new recruitment were through common entrance at post of JTO at Junior management level, & JAO in finance stream. 

4. Job description at any post is not specified.

5. No role of employees working in fields in any decision making in the company.

6. No proper career progression to qualified and talented young workforce.

7. Huge corruption at various levels in procurement of equipment and tenders  ultimately affecting quality of network.

8. Limitation of fulfilling social obligation on behalf of Government of India  in rural and non-profitable areas.

9. Huge liability of retired employees towards  Medical benefits.

These were the obvious reasons that Government could not bring any professional leader from private sector to lead  BSNL.

Growth of BSNL after 2014 and decline

After finding no contender finally one more ITS officer was assigned the Job of leading the company Shri Anupam Shrivastav, working then at the post of Director CM. Being very dynamic leader Anupam Shrivastav brought new Zeal in the organisation with taking various initiatives to upgrade BSNL network and providing competitive tariffs at par with the private operators. BSNL came to operational profit in the year 2015 with operational profit of 672 crores and next financial year of 2016  it booked operational profit of 3855 Rs . But BSNL could no longer continue increasing its revenue due to launch of RJIO in 2016 and free services it offered for six months.

Predatory pricing by RJIO not only affected revenue of BSNL but all the private operators causing shut down of number of Telecom operators namely AIRCEL,UNINOR, TATA TELESERVICES, RELIANCE etc. VODAFONE IDEA merged their business to mange their losses. AIRTEL and VODAFONE-IDEA finally managed to increase their revenue with launch of 4G services and taking fixed monthly charges for their services. BSNL is  still waiting for 4G spectrum since 2016 . BSNL upgraded its network to launch nationwide 4G but spectrum was the only roadblock , to test its 4G services BSNL has shut down its 3G services in many Cities across India but it is not widely available.

BSNL has requested Government to provide 4G spectrum by equity infusion and payment from its own resources. But this request is still not entertained by Government of India which is still looking at various aspects of providing 4G spectrum to BSNL.

Recently CMD, MTNL, Shri P. K. Purwar (ITS) has been appointed as CMD BSNL for 5 years , with the very motive of merging these two companies , as per the intention of Government.

What is the future of BSNL?

This is the biggest question what everybody asking including 175000 employees of BSNL. As per the agreement between Government and Unions and associations of BSNL at the time of formation of BSNL , Government of India has committed to take care of financial viability of the organisation. Telecom minister has also issued statement in the parliament  in his second term  that BSNL is strategic PSU and responsibility of Government. 

Government is looking for various proposals submitted by DOT , there are two main proposals:

1. Funding by Government for VRS to nearly 54000 employees and 4G spectrum by issuing sovereign bonds against Land parcels of BSNL

2. Reduction in the retirement age from 60 years to 58 years.

While Unions and Associations of BSNL has openly opposed VRS , and age reduction Gvernment is looking determined to take some positive steps ,altough there are hurdles in reducing retirement age from 60 yrs to 58 for a sindle PSU.

While one option is there which Government may consider is compulsary retirement to inefficient staff working in BSNL and MTNL both. As per the Memorandom issued by DoPT on June 20, 2019 , all central Government and PSU's has to review performance of employees above 55 years of age on monthly basis and compulsory retire the non performers. Reviewing performance after age of 55 is regular practice in most of the PSU's and Government departments, but not taken seriously. Recently Government has given compulsary retirement to commisioner level officers in income tax department. By this Government has given clear message perform or perish.

But is it possible to reduce staff in BSNL by Giving compulsory retirement to non performers.It may be but reducing staff only will not solve the problem of BSNL.

What are the challenges after reducing staff expenditure?

It is true that nearly 75 % revenue of BSNL  is going in staff salary.But reducing staff only can't bring these companies in profit , as revenue of both the companies is falling considerably year on year. The main reason is lack of vision and business planning, poor services , delay in network upgradation, lack of investment at right place.

BSNL was planning FTTH in 2008-09 but with the auction of 3G spectrum in 2010 focus of BSNL shifted to 3G it could not  expand its footprint in FTTH beyond few cities.On the other hand it could not utilise its all India 3G spectrum due delay in nationwide 3G launch. Again while JIO is ready to enter in FTTH services ,BSNL could not capture market in spite of huge resources due to non availability of investment capital and roadmap due to uncertainty about intent of its parent organisation DOT and Government of India. 

Although BSNL its pushing aggressively its FTTH service ,it lacks the speed of execution due to financial crisis at the moment. Due to decline of revenue , no loans from banks and no financial support from Government operations and project has severely affected. BSNL has not paid its vendors, contract labours and its field staff for maintenance since last six months. Most of the employees has low morale due to negative media news and uncertainty of future of the organisation. 

While Government is only focusing on reducing staff expenditure , there must clear roadmap that how the services will be maintained after reducing 70 % staff of these companies. BSNL is providing landline, broadband and leased line services even at remote areas. While BSNL is looking partnering with vendor for providing FTTH and Broadband services on revenue sharing basis , it is really challenging to find one for rural services. 

The image of BSNL and MTNL is deteriorating due to non payment to vendors ,with every passing day chances very bleak that new vendors will work with these companies. So running these companies after reducing staff will itself a challenge.

"As far as the future of BSNL is concern, it will be clear only after implementation of revival plan of Government and roadmap of company by DOT and BSNL management. "

What is at Stake?

Although common man is least bothered about the future of these two public sector PSU's. These two organisation are very much required for national security, and  having a control of Government on telecom market and to deal with any emergency situation in case of natural calamity or disaster. 

If revival of BSNL fails , future of the employees recruited after year 2000 will be at stake, because employees recruited prior to year 2000 are very much secured with pension benefits. 

As Indian telecom market is facing cut throat competition and already under heavy debt . If stress on the sector not released operators will be bound to raise tariffs in such case all the burden will directly transfer to the customers . In the absence of Government PSU customers will be left with no option but to fall prey to high tariffs of private operators.

Why USA and European countries paying ISRO for satellite launch

In recent years ISRO has increased its satellite launches not only number of launches but number of satellite in single launch, also increased  by ISRO . It is a matter of great pride that Indian space agency has  mastered in low cost satellite launch .  Capability of launching multiple satellites by single rocket has created business opportunities for ISRO . Number of foreign countries are sending their satellites in space with the help of ISRO . Not only small countries like Kazakhstan & Indonesia  but also developed countries like USA, UK, Germany etc. are also hiring ISRO for satellite launch.

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FOREIGN SATELLITE LAUNCH BY ISRO

Commercial launches of satellites for foreign nations are negotiated through commercial arm of ISRO that is ANTRIX. Till october 2018 ISRO has launched 249 satellites of 28 foreign countries.Between 2013 and 2015, India launched 28 foreign satellites for nine different countries earning a total revenue of US$101 million.

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On 15 Feb 2017 ISRO successfully launched 103 satellites by single rocket . Out of 103 only 3 satellites were of India , remaining were foreign satellites .  While whopping 96 satellites were of USA , while the others come from Israel, the UAE, Kazakhstan, the Netherlands, Belgium and Germany. By this launch ISRO created history by launching maximum number of satellites with a single launch .The previous record was held by Russia's Dnepr launcher which launched 37 in June 2014 .All of foreign satellites were launched by ISRO by PSLV(Polar Satellite launch vehicle) rocket

WHY DEVELOPED COUNTRIES SEEKING ISRO's HELP

No doubt that Indian Space Research Organisation (ISRO) has progressed significantly in space technology . But USA is already a space superpower and launched various space missions like on MARS ,  JUPITER etc. still it is taking ISRO's help to launch its satellites.There must be some solid reasons for that .What are these reasons.

Why India require PSU's

LOW COST OF SATELLITE LAUNCH BY ISRO

It is acknowledged by whole world that ISRO is capable in low cost satellite launch . By hiring ISRO for satellite launch these countries are saving a lot of money to be spend on Rockets for satellite launch also they are avoiding the risk of loosig costly rockets in case of technical failure. 

CHANDRAYAN -I

 Chandrayan -I, launched on 22 October 2008 aboard a PSLV-XL rocket, was a big success for ISRO as the Moon Impact Probe, a payload on board the Chandrayaan-1 spacecraft, discovered water on the Moon. Apart from discovering water the Chandrayaan-1 mission performed several other tasks such as mapping and atmospheric profiling of the Moon.

The estimated cost of the mission was only 368 crore rupees which is much cheaper than many hollywood films.

SPACE LIABILITY CONVENTION

This is a major concern for the countries in the coming years . thousand of satellites has been in the space by various countries which are rotating in the various orbits like , Lower earth orbit, Geostationary earth orbit etc. With the increasing number of satellites there is a risk of collision of satellites in space or damage from satellite debris entering in the atmosphere. To take note of these risk  Space liability convention has been  adopted by International Space Agencies. As per the convention the country launching satellite for any damage on earth or flight the the debris of the satellite . While utmost care is taken in selection of orbit of every satellite , risk arises after the useful life or failure of satellite when it can't be controlled from earth. In such case there chances of damage from the debris created by satellite in space and on earth a well. While most of the space debris burns while entering into atmosphere , still chances are there to cause some damage.

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Blogging for Beginners Patrt-II

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Thus by launching huge number of satellites for foreign countries ISRO has taken the added responsibility of compensation in case of any damage from these satellites.

ISRO is likely to launch "Chandrayaan -II" coming few months when it will try to land payloads on pole of moon which is not done by any other country . Hope ISRO will create yet another milestone with Chandrayaan -II. The estimated cost of the mission is just Rs . 800 crores .

Data is new blood but don't let it be a disease

Indian Telecom Industry has seen a drastic change in last three years. Data has become the main source of income for telecom Industry. Voice services are almost free with the monthly data .But as a common man what has changed in your life. Is it a natural change or a change brought with some motives , it is a big question. To understand this you need to look back and analyse how things has changed in past years.

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In the year 2007 Google launched its open source operating system android and in  2008 first android mobile was launched when Nokia was dominating Indian market with its Symbian operating system .Slowly smartphones came into market and android became the primary OS in most of the smartphones.With the increasing android users Google started Google play store in competition to iPhone App store. Google started collecting user information from android database. New versions of android updated which required high memory space in mobile .Thus user were compelled to buy new devices.

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TRAP OF MARKETING AND ADVERTISING COMPANIES

Will golden era return in Telecom and Aviation sectors, in India

Although people are too busy in social media entertainment platform like Facebook, Instagram, whats app ,LinkedIn,Tik-Tok  and Youtube. Very few are cautious about monitoring of user online activities and interests by these platforms. Marketing companies including google ,Facebook keeps track of viewing history of user and displays videos ,ads related to user interest . User after viewing ads of their interest may become a customer for companies giving ads. These companies are earning huge amount of money from the advertisers . People being addicted to these social media platform waste a lot of precious time ,and  money to pay for data charges and mobile devices.
Artificial-intelligence-and-future-with-AI

While in India new records are being made for data usage by Indians .Everybody giving credits to RJIO for low data tariff war, which has enabled Indian users to access unlimited data and unlimited voice at throwaway prices. Although it is true that per GB data is very cheap now as compared to per GB data before 2016 , it is worth to note that telecom operators revenue from voice services has reduced considerably. To increase ARPU operators has to migrate users to data plans with unlimited calling .While monthly data charges are ranging from 149 to 190 Rs. still ARPU of most of the telecom operators is below Rs 100 except RJIO which is having mainly data user base.

ADVERSE EFFECTS ON SOCIETY

 Unlimited data has compelled users to spend more time on their mobiles thus reducing physical communication among family members and friends . This in turn has affected very badly the emotional bonding in the society. A new trend of living virtual life on social media has evolved, causing dissatisfaction in personal life  as people has started to compare their life with the virtual life which is being displayed on social media.

Increased Cyber crime

Easy access to data and online banking and transactions has caused surge in cyber crimes. Cyber criminals easily access details of their targets on social media and use details to cause online frauds, blackmailing and other criminal activities.As per the reports incidents of cyber crimes has increased in India. “As per the information  tracked by Indian Computer Emergency Response Team (CERT-In), a total number of 44,679, 49,455, 50,362 and 53,081 cyber security incidents were recorded during the year 2014, 2015, 2016 and 2017, respectively. Which clearly indicates easy access of data in India is one of the reasons why cyber crimes has increased. This figure may increase rapidly in future as still data user base in India is below 50%.

Peer pressure and addiction to technology

young generations specially school going students are feeling great peer pressure due high end mobile devices and frequent change of technology. Students belonging to rich families display their costly mobile devices and its features  to their classmates , due to this other students demands same from their parents .Thus financial burden on parents has increased and they are more worried about the study of their children. Various instances has been reported in recent past where students taken extreme step of committing suicide when their parents failed to fulfill demand for costly smartphones.

Changing Technology ,Automation and Threat to Employment

With rising data usage telecom operators and Internet service provider has to upgrade their network and technology rapidly ,thus requiring huge investment .With the rising competition the only way to cut cost , these companies are reducing employees. Companies looking towards automation in coming days there may be severe shortage of employment. Which is really a serious concern for a large country with huge population like India.

While many experts argue that with the advancement of technology new opportunities will be their for future generations but when India is suffering to fulfill the current need of skilled people.How next generation will get the opportunities. It is really difficult for a country like India where still more than 50% population lives in villages with no proper employment, education and healthcare. There is no clear road map of the Government how it is going to meet the rising needs of employment with the growing population and automation.

After the launch of RJIO Indian telecom market destabilized causing closure of many small operators and now government is planning VRS of 30 % of employees from BSNL. All this happened in just a short span of time from 2016-17 to 2018-19. Now focus of all operators is on 5G , which will further boost automation in many fields . Future will decide if technology will bring prosperity or hardship for India.

Why BSNL is in the news Just ahead of Loksabha Election

Many of the Indian citizens think that there is no need of BSNL in the era of high speed data and uninterrupted services provided by Private Telecom operators. Everyone is writing about BSNL without any knowledge about the organisation, its functioning and limitations.

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While many articles have been written about BSNL many of the them has created ire from the side of BSNL employees .

Data is new blood but don't let it be a disease. 

Recent few disputed articles are published on www.firstpost.com. Before telling about firstpost let us take a look at the recent articles published on firstpost related to BSNL. Two articles published on 14h and 15th march for which links are given below:

1.Centre should sell BSNL after dismantling it rather than extending bailout package to keep telco ringing.

2. Bailout package for debt-ridden BSNL: Keeping Air India and public sector telecom firm afloat at all costs is a monumental blunder.

 * In the first article although writer used the name of AIR INDIA and HAL for indicating loss making PSU's but center of the article is BSNL. Here writer clearly raise concerns over bailout package to BSNL by Government and suggested to dismantle it and sell citing the reasons of accumulated losses of approx 57600 crores.

Artificial-intelligence-and-future-with-AI

While it is imperative to say that writer forget to mention the profits booked by the PSU to the tune of approx 44900 crore since 2001-2009. The article also undermines the huge employement provided by PSU (currently 1.73 lakhs ). Providing employment to its citizens is the responsibility of the government, predatory pricing by RJIO and silent support of government has already caused  many small Telecom operator to shut their business, leaving  employees on their fate.

Total employee strength of all existing private Telecom players collectively is not even 50% of BSNL. BSNL provides connectivity to far flung areas of leh laddakh, North eastern areas and naxalite areas where private operator failed to provide services. What about the social obligation of the government. When matter related to national security arises government can only rely upon BSNL and MTNL. As per the article government should earn money by selling huge assets of the PSU, but if earning of revenue would have  been the prime focus of government, there was no need to form BSNL and MTNL. These two companies were built to stabilize the telecom market and avoid monopoly of private players.

* Second article published on March 15 is even more controversial as it manipulates fake figures of customers for operators. As per TRAI report Vodafone - Idea is the largest operator with more than 41 crores customers, followed by AIRTEL 36 crore customers ,RJIO is third operator with 28 crore customers, and  BSNL is at 4th place with 11.7 crore customers. But as per writer of the article RJIO is market leader with 27 crore customers, while Vodafone-Idea and AIRTEL both have 10.13 crore customer, and BSNL is having just 2.03 crore customers. Why such fake figures were published on the website is a big question mark?

Then it came to know that first post is owned by network 18 media group. Which itself is the media company owned by Reliance industries of Shri Mukesh Ambani, owner of RJIO.

In place of  justifying honest reasons for opposing bailout package to BSNL author provided wrong figures.

What to worry About?

It is surprising see that lots of negative news are being published about BSNL and other PSU's just ahead of Loksabha Elections. The state owned telecom operator is waiting for 4G spectrum since 2017 which was being delayed at the end of DOT and Government but no political party tried  to question the  Government in two years for delay in the decision of the Governemnet, which earlier charged its predessors for not allowing the telco to compete with private operators by delaying equipment procurement and policy decisions.

While Prime minister announced from Red fort in 2015 that their Government brought BSNL out of  losses to operational profits,it is disheartening that he did not utter a single word on media news about possible closure or privatisation of the State owned Telecom operator . Although BSNL has started its 4G services in few circles and likely to launch nationwide on its 3G spectrum shutting 3G service, it can provide VoLTE services only after allotment of 4G spectrum. 

While many articles published about huge losses of BSNL and its survival, a detailed analysis of profits and losses since inception of Telecom opeartor has been published on the website bsnlteleservices.com.

As per the article BSNL earned earned profit of Rs. 44990 crores from 2001-2009 and total accumulated losses from 2010-2018 is approx Rs 57878 crores. While total dues which is yet to come to BSNL is Rs. 54500 crores. Which results in net profit of Rs 41612 crore .

If we believe on these figures about BSNL then there is no need to create Hue and Cry . Still when elections are going on there are political reasons to highlight failure at the end of Government true or false. 

But the question is ,"Does India Need a Government owned telecom operator or not".

If we think as a common citizen we don't feel like it is required . But if we think about the importance of the Government organisation in telecom we will realise that in every situation of natural disaster , emergency situation Government can rely only its own organisation. As far as huge workforce of the Government organisation is concerned its the weakness as well as the strength . In any case of natural disaster BSNL restores its services ahead of all the private operators, only because of its huge workforce working in all corners of India.  

Source: firstpost.com & bsnlteleservices.com