Who bluffed whom? Sibal may have to rethink RCom decision

On 18 February, 2011, Union Communications Minister Kapil Sibal over-ruled his ministry’s bureaucrats and reduced the penalty they sought to impose on Reliance Communications (RCom) from Rs 50 crore to something just above Rs 5 crore for violation of the Universal Service Obligation Fund Agreement (USOF Agreement). Five officers in his ministry, including the telecom secretary, had unanimously recommended this fine as RCom had unilaterally switched off its base transceiver stations (BTSs) on 22 November 2010. There is no exit clause in the USOF, which is basically a fund created to subsidise unviable rural telephony. Of the 53 clusters it was supposed to operate USOF services in, RCom said it wanted to run only seven clusters. [caption id=“attachment_44061” align=“alignleft” width=“380” caption=“According to Firstpost’s investigation RCom has not restored or started services in over 40 percent of the BTSs in some areas of Rajasthan covered by the USOF. Reuters”] [/caption] Sibal’s justifications for reducing the fine were two-fold. First, since there were in-built provisions (Rs 500 a day) in the USOF Agreement on how to penalise “temporary disruptions” of service, the ministry should apply these penalties rather than the more stringent ones specified in the mother agreement covering the overall telecom licence — the Unified Access Service Licence (UASL). Secondly, Sibal quoted an RCom note dated 16 February 2011, claiming “that they have already switched on the sites in the earliest possible timeframe after mobilising their resources.” Here’s news for you, Mr Sibal: RCom hasn’t really switched on all its BTSs “in the earliest possible timeframe”, as promised. In fact, it had not switched on many of the BTSs when it said it was switching them off in November last year. RCom’s performance in meeting its USOF obligations has been one of the worst. Firstpost undertook a 3,500 km investigative trip in Rajasthan to check on RCom’s USOF record since Sibal’s ministry hadn’t carried out even a basic due diligence on compliance before reducing the penalty. Our conclusion: RCom’s claims of having restored services are partly misleading. RCom has not restored or started services in over 40 percent of the BTSs in some areas of Rajasthan covered by the USOF — it hadn’t even started services in some, and it has not resumed services in some of the BTSs it had switched off on 22 November 2010. According to a Firstpost survey, 43 percent of RCom’s rural mobile sites in Rajasthan alone have not been switched on. “RCom has never started services from 175 out of a total 403 base transceiver stations (BTSs) in Rajasthan so far,” confirms Bharat Sanchar Nigam Ltd’s chief engineer Dayanand Chaudhary. After sending a letter to the USOF Administrator on 21 November, RCom had switched off 146 BTSs for over two months (even three months, in some cases) in Rajasthan. Most of them were switched on later when the company tried to convince Sibal that it was restarting the sites, but not those that had developed “snags”. It is not clear how many BTSs had developed snags. RCom is not trying to rectify the problems and has apparently aborted its operations in such rural sites. This is the story from only one telecom circle with 403 BTSs in four clusters (62, 63, 64 and 65) where RCom has apparently wound up or not started 43 percent of the rural sites. Under an agreement dated 16 May 2007, RCom had agreed to provide this service from BTSs in 53 clusters (5,118 sites across 13 telecom circles). The USOF provides a subsidy for services provided in unviable rural areas, but RCom, in its first frenzy of rural expansion, threw caution to the winds and aggressively bid for USOF services, even paying fees for some clusters instead of seeking a subsidy. According to DoT sources who declined to be identified, Reliance has been the most recalcitrant player among those providing USOF services. It claims it had switched the base towers on just before Sibal reduced the fine, but it has more or less abandoned over 40 percent of the rural sites, where it is the USP (universal service provider). But in Kerala and most of Madhya Pradesh, where RCom is the infrastructure provider (IP) and stands to earn money from other USPs, it uses USOF money to operate services. (Under USOF, one company provides the infrastructure and earns fees from two other operators who share the infrastructure and operate services). When Firstpost returned after its survey of USOF sites in Rajasthan, we contacted both RCom and Kapil Sibal to get their versions on RCom’s apparent failure to live up to its claims that it had switched on its BTSs. The response from Kapil Sibal’s office, which came a whole week later, muddied the picture. Sibal said he had set up an enquiry to look at the performance of all universal service providers when the questions were about RCom. A committee has been set up to study the whole issue and submit its report within eight weeks, Sibal’s office told Firstpost.  (See full reply from Sibal’s office). Firstpost, which published an exclusive report titled “RCom gets a multi-crore reprieve for pulling rural telephony plug”on 1 July, drove through Rajasthan’s deserts to the farthest villages, criss-crossing the districts of Jodhpur, Pokharan (sub-district), Jaisalmer and Barmer. In Rajasthan, BSNL is the infrastructure provider (IP) and Vodafone and Reliance are the USPs (universal service providers). At some places, Bharti Airtel was the third USP. BSNL was to provide infrastructure and Vodafone, Reliance and Airtel are supposed to use this infrastructure to operate their mobile services in remote rural areas. USPs are supposed to pay two charges — a fixed charge, that is rent (Rs 5,000) for the BTS, and power and fuel charges, which normally work out to around Rs 30,000 a month per USP. And according to the USOF Agreement, there is no exit route for any party – IP or USPs. From May 2007 onwards, BSNL began to erect 403 towers and provided shelter and other necessary infrastructure for radiating BTSs. BSNL’s Chief General Manager AK Jain says: “We were a little late in providing the infrastructure, but the USOF Administrator had condoned the delay and had permitted BSNL to carry on with the job.” By May 2009, the towers were ready for use. Two years went by, but RCom did not install its BTSs at nearly 43 percent of the rural sites. Have the other USPs done what RCom did not? Bharti Airtel and Vodafone too have not switched on BTSs at about 10 percent of rural sites. Their degree of non-compliance, however, seems lower. The Firstpost team visited 30 USOF rural sites on a random basis. Of these, RCom had not switched on BTSs at 25 sites, while Vodafone was absent from just one rural site.  Here’s what we found: • Village Roopsi, Jaisalmer: Status: Reliance never radiated since inception in May 2009. Reliance kept the batteries, but never switched them on. Two other USPs - BSNL and Vodafone - are working. • Village Mokla, Jaisalmer Status: Not radiated yet. Reliance guys came, but never put up their system. Airtel and BSNL are switched on here. • Sultana, Jaisalmer Status: Did not switch on.  Reliance never radiated. Vodafone and BSNL are working. • Deega, Jaisalmer Status: Did not switch on. Reliance did not even install BTS. BSNL and Vodafone are working • Moti Kilon ki Dhani, Jaisalmer Status: Reliance never switched on the site. BSNL and Vodafone are working. • Chacha, Pokharan, Jaisalmer Status: Guard Fateh Mohammad says: Reliance guys came, but never switched on their system… Vodafone and BSNL work here. • Almasar, Barmer Status: Never switched on. Vodafone and BSNL work here. • Sadram ki Beri, Barmer Status: Never switched on. Vodafone and BSNL work here. • Sihaniya, Barmer Status: Never switched on • Sarla, Barmer Status: Never switched on. Only BSNL works here. There are 175 such BTSs, where RCom has virtually ‘abandoned’ its operations. Also, it is winding up its operations in some rural sites, where its machines have developed some snag. In some cases, RCom engineers have even moved machinery from these defunct sites. Sample these: • Kekar, Barmer Status: BTS was installed, but this tower was never switched on… Reliance moved its BTS and other equipment to some other station. Vodafone and BSNL work here. • Village Motai, Jodhpur: Status: The battery or some parts of a machine were burnt about a year ago. Reliance engineers did visit the place, but they have replaced the burnt parts and did not switch on the site… Vodafone and BSNL work here. • Madwa, Pokhran, Jaisalmer Status: Guard Hukma Ram says: Reliance installed BTS about two years ago, but it was stolen the next day… RCom engineers took away some part of the machine recently, while Vodafone and BSNL work here. Similarly, in Sriganganagar district, RCom’s BTSs were burnt at two villages — Modiya Mansar and Swaroopsar. RCom is apparently in no mood to rectify the problems. Bansi Lal, a guard at village Motai’s tower, confirms that RCom engineers had arrived twice, but the battery had not been replaced for nearly a year now. (To understand why RCom is a laggard in its USOF obligations, read here ).