BSNL & MTNL 4G Spectrum Surrender : Is it the first nail in their coffin ??

BSNL & MTNL management will be quite relieved with the Group of Minister’s decision to refund the money paid by them for BWA spectrum. But both the companies will realize couple of years down the line that this decision will prove to be the first nail in their coffin. Ironically it has been taken by GoM which has been constituted for the revival for BSNL and MTNL. The management of both the companies have been selfishly demanding to surrender 4G spectrum, that will form the backbone of the future telecommunications,  to make up for the burgeoning losses that they were unable to control.  But in the process they have taken irresponsible decision to choose short term gain over long term survival.

Now let us examine the grave implications for BSNL & MTNL for surrendering BWA spectrum back to the government which has given preference to these PSU’s over private operators in few cases. Now government will bring up the premium spectrum for auction and in the process fill its coffers. In this scenario 4G spectrum will only be available with private operators and they will be ready to pay any price as demand for data services has surged manifold with massive proliferation of smartphones and tablets. Presently Reliance Jio Infocomm and Bharti Airtel are the major players in this space and with more spectrum for auction available now other big players such as Vodafone, Idea Cellular etc. will join the club. So after a couple of years when major operators  will be offering ultra high speed wireless data services over 4G both BSNL and MTNL will be toothless as they cannot go beyond 3G. They will be bound to loose heavily in mobile space and see their revenues and subscriber base fall helplessly as they won’t have the ammunition to pose any fight to these private operators which are quick to form cartels when opportunity strikes.

Now imagine if BSNL and MTNL had done the same thing when 3G spectrum was allotted to them couple of years ahead of private operators. Today only private operators would have been offering 3G services and these PSUs promoting 2G services. At a time when 3G tariffs are getting matched with 2G rates and range of affordable smartphones are adorning subscribers’ palms which segment of consumers will choose 2G over 3G.  With competition in voice tariff flattening out there is nothing much a company without 3G spectrum can do to fight with operators with 3G spectrum as subscribers are now hungry for higher speeds to fully exploit the power of their smartphones and tablets.

Currently BSNL & MTNL at least have something to offer in mobile space as they have 3G spectrum and they are the only players which can promise 3G roaming across India to its subscribers as intra-circle roaming pacts by private players are still under dispute.  Although they lack the sales and marketing prowess of their private counterparts, they still attract some segments of the consumers which are helping them gain revenues and survive. And most importantly they help in bringing more competition in the market and prices down to attract consumers for its services. But without proper spectrum they will have nothing much to offer and will die a slow death in the coming years. The management of BSNL and MTNL have been unwise to surrender the future technology and jeopardized the future of these PSU’s which have immensely benefited Indian telecom industry and consumers.

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I write for - an Indian Telecom Industry Blog and mainly interested in exploring Gadgets, Technologies, Telecom Pricing and tariff plans.