The Right Ring Tone

Posted by Shyam Ponappa at Apr 23, 2010 07:30 AM |
Filed under:
Focus on improving service quality with a strong partner, and not on one-shot stake sales, says Shyam Ponappa in his article published in the Business Standard on April 1, 2010.

Just five years ago, Bharat Sanchar Nigam Ltd (BSNL) was India’s second most profitable company, with net profit of nearly Rs 6,000 crore — nearly equal to Hindustan Unilever’s revenues — with over Rs 36,000 crore in revenues. By March 31, 2010, BSNL expects a big loss, while a competitor, Bharti, with revenues of only Rs 8,000 crore then, has caught up in revenues and is far more profitable. Mahaganar Telephone Nigam Ltd (MTNL), too, is struggling to stay profitable.

While these public sector giants are in a graveyard spiral, they still have valuable assets in their reach and their networks of hundreds of thousands of kilometres. They also have a corps of technical professionals, with unmet user needs burgeoning in cities, towns, and all over India’s hinterland.

How can BSNL/MTNL be extricated from their predicament, and built up to become more like a State Bank of India, instead of a moribund Air India and the once-dominant Indian Airlines? Consider the present and future possibilities.

The pertinent facts are:

  • The network and capacity are valuable assets for operations, provided services are rationalised and extended in commercially sound ways.
  • Neither BSNL nor MTNL has been able to successfully capitalise on its headstart in WiMAX and 3G.
  • Given present trends, both will run up mounting losses.

All management and employees, including the Indian Telecom Service (ITS) officers, will have to engage in radical changes voluntarily. This is why all stakeholders, including the government, have to seek collaborative solutions, to resolve anachronistic legacy situations that cannot continue on terms as fair as possible, including a VRS, and possibly pay cuts for deferred profit-sharing. The alternative is losing a strategic backbone network-operating capability, something India needs, with the associated hardship for so many employees.

Dire prospects

The outlook for both BSNL and MTNL shows in their performance (Figures 1 and 2).

For BSNL and MTNL, increased employee costs after the Pay Commission recommendations, together with declining fixed-line revenues, led to deteriorating profits. Meanwhile, years of stalled procurement, decreasing earnings and a recommendation to divest 30 per cent have all led to a stand-off at BSNL, with a threatened strike. Whether in public or private sector, there have to be good services with good profits; otherwise, competitors will devour them.

Doing the unthinkable

Are there ways out? Can these investments in equipment and people be resuscitated by some miracle of management and IT engineering to be at the heart of the country’s expanding communications services? Can their personnel pull together?

That magic could come about if individuals and interest groups rise above themselves, avoiding opportunistic self-enrichment, and approach problems collaboratively instead of antagonistically, and if the government can abjure misguided fiscal zeal.

  • Instead of divesting a stake as a one-shot, revenue-raising deal, induct a strong partner to build services and revenues.
  • Serve user needs, instead of offering “products” with some internal geographic or technological definitions that are not easily understood.
  • Rationalise services like EVDO cards (broadband data cards) that are not customer-centric, because if they work in the rest of the country, they don’t in Delhi and Mumbai, and vice versa.
  • BSNL and MTNL could go for collaborative data-streaming with 2.4 Mbps EVDO cards usable everywhere, offered with a service level and style that can only come with a hands-on partner changing the off-putting way BSNL and MTNL treat customers.
  • Get politicians out of procurement, and induct technology like wireless corDECT at 512 Kbps for rural areas if appropriate, even if it is “old” and not state-of-the-art, instead of waiting for years for alternatives that aren’t there of 3G or LTE (Long-Term Evolution or 4G), and will cost much more.
  • Move up to 3G/LTE after some years of generating profits.
  • Work with India’s technology companies to build local equivalents of Huwaei and ZTE, with India’s assured markets. (This requires policies far beyond the ambit of the DOT, as in the way China has nurtured Huawei/ZTE for years.)

Put the whole package together, end-to-end, and BSNL/MTNL could be winners, as would the public.* Private operators will face competition if this happens, but they can gain from the rise in business levels. These are big issues for immediate consideration and action. Such challenges are best addressed collaboratively.

Although collaboration seems far removed, notable exceptions like Amul, Operation Flood, the Sirmour farmers’ cooperatives for irrigation, SEWA (Self-Employed Women’s Association) and Infosys prove that it is feasible.

Problem-solving vs confrontation and attrition

Thinking and acting in our collective interests require making hard choices after cost-benefit analyses. From this perspective, we should address BSNL and MTNL from an assessment of India’s needs and available alternatives, rather than only as a historical mess. True, the mess has to be dealt with, but with forward-looking considerations of public benefits for the common good. Employees need to recognise this, juxtaposed with the consequences of unyielding self-interest. We need problem-solving, not battles of attrition from hardened, silo positions of unions, government, and management, or ITS versus the rest, or any entrenched interest group. These legacy positions are “dug in”, and perpetual confrontation leads to desecration: of service capability, of competitive staying power, productivity and of sheer employability. There is so much more they could do for a potential one billion users.

It isn’t that self-improvement is not being attempted, like the Sanchar Nigam Executives Association (SNEA) addressing processes such as Call Detail Record (CDR) systems for customer care and billing, or Managed Services and Managed Capacity, Bharti’s innovations in outsourcing not only development and maintenance, but even procurement to Ericsson, as recommended by the Pitroda committee.** The change that is required is for all groups to pull together, however simplistic it may sound. Then, these national assets — the networks and human resources — can be leveraged to compete effectively with private operators.

Read the original article in Business Standard

Filed under: