Upgrade of BSNL existing sites to 4G put off again

According to a new security directive that has been put in place for the telecom sector, all operators have to use equipment only from what the government calls ‘trusted sources’, and for this approval has to be taken from NSCS.

The government nominees on BSNL’s board last week, for the second time, deferred a key proposal floated by the company to upgrade its 2G/3G sites in the southern and western zones to 4G. The deferment came despite BSNL securing the National Security Council Secretariat’s (NSCS) nod to upgrade the 13,533 sites in the two regions.

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In an earlier board meeting, since the government nominees had cited security concerns related to the proposal to upgrade the sites, BSNL had this time armed itself with an approval from NSCS. Given the criticality of the situation, the NSCS provided its approval to go ahead with Nokia as the equipment supplier.

According to a new security directive that has been put in place for the telecom sector, all operators have to use equipment only from what the government calls ‘trusted sources’, and for this approval has to be taken from NSCS.

In fact, BSNL CMD PK Purwar had earlier written to the telecom secretary, Anshu Prakash, requesting that the government nominees be advised to give their assent to the proposal in the board meeting.

The upgrade of sites in south and west zones will cost Rs 567.35 crore and once the approval is given, it would take three-four months to launch 4G services in these regions. BSNL is pushing for the upgrade because the pan-India rollout of 4G network by Indian firms is facing issues.

The delay in BSNL’s regular tender for 4G tender is facing delays in finalisation because the government has laid down guidelines that only ‘domestic core or Indian core’ can be used in building the network.

In keeping with this requirement, BSNL floated a tender for procurement of 50,000 sites issued letter of intent to five vendors — TCS, Tech Mahindra, HFCL, L&T and ITI. However, some technical issues have cropped up, which needs to be resolved.

For instance, apart from TCS, other companies such as Tech Mahindra, HFCL and L&T are said to be facing challenges with their core partner Pertsol. These firms have communicated to BSNL that conducting trials with Pertsol may not be successful. TCS on its part, has suggested 128 deviations in the prescribed guidelines, which BSNL feels could jeopardise its business prospects and impact customer experience.

Given the scenario, the network rollout by the Indian firms is not expected to happen for another 18-20 months, so doing the upgrade at minimal cost was the best case scenario for BSNL in the interim.

Majority of BSNL’s network has been rolled out by two vendors – Nokia and ZTE. But since ZTE is a Chinese company and has not registered with the competent authority, BSNL can’t place an order on it. BSNL being a state-run firm has to follow the revised General Financial Rules (GFR) rules, which bars Chinese firms participation in public tenders, unless registered with the competent authority. But an order can be placed on Nokia, for which NSCS has given its approval.

“This is the most cost-effective way for 4G services expansion and will save hundreds of crores of capex. The entire exercise of upgrade can be completed within a shortest time-frame of 3-4 months without disturbance to the existing network and services,” Purwar said in the letter to telecom secretary, a copy of which has been seen by Financial Express.

The exercise would also help BSNL increase its revenues as south zone alone contributes about 40% to its overall revenue generated from mobile services. Purwar has highlighted that the company’s mobile subscribers are facing bandwidth issues, which has resulted in huge churn mainly due to non-availability of 4G services.