Is BSNL's revival plan falling short of reaching its goals?

"It is crucial for the country and its consumers that BSNL stays on track and doesn't retreat prematurely. Additionally, this proposed plan will benefit other players such as Bharti and Vodafone Idea, as they will be empowered to launch pure (SA) 5G by gaining access to the airwaves freed up by BSNL's vacation of the 900 MHz spectrum," Kar states.

The Government of India recently announced an Rs 89,000 crore revival plan for BSNL. In my opinion, the plan falls just short of unlocking its full potential. An analogy would be someone climbing Mount Everest but stopping just a few meters away from the summit. Let me elaborate on what I mean.

BSNL will face difficulties in attracting 4G customers.

But why? The cost of owning 4G devices will significantly increase for BSNL's customers, especially considering that a large portion of its user base belongs to the lower-income segment. It's comparable to a company trying to sell services in unconventional packages (700 MHz 4G devices) with limited demand due to the unpopularity of this frequency band for 4G. As a result, BSNL will be at a significant disadvantage and unable to benefit from the economies of scale that come with a larger volume of devices already present in the market. Wouldn't it make more sense for BSNL to align with the prevailing trend (existing device volumes in the market) rather than going against it?

BSNL will encounter challenges in deploying Standalone 5G.

Again, why is this the case? To simplify the explanation, let's imagine you own a house with a preferred room (700 MHz) where you spend 80% of your time. Now, suppose you want to renovate your house with new features and capabilities (5G). What would you do? Wouldn't you temporarily move into an equivalent room (800/900 MHz) within the same house until the construction work is completed? But what if your house doesn't offer this option (900 MHz is occupied by GSM, and 800 MHz is inaccessible), and instead, it only provides the option to move to an open terrace (26 GHz band) or an enclosed terrace (3.5 GHz band) on the first floor. Would you be willing to move out there and risk getting wet during occasional rains? I'm sure you wouldn't.

This is precisely the situation BSNL faces. Once it deploys 4G in the 700 MHz band, it won't be able to smoothly transition to 5G without asking its customers to switch to competing networks or experience degraded services. The problem is further compounded by the fact that the available spectrum in the 700 MHz band is only 2x10 MHz, which is insufficient for accommodating legacy 4G users. The 2100 MHz and 2500 MHz bands are also unsuitable alternatives for BSNL's optimal rural deployment due to poor coverage.

BSNL can easily unlock value if...

...the Government of India provides immediate access to the 800 MHz band for BSNL to roll out 4G services while keeping the rest of the plan unchanged. Access to the 800 MHz band can exponentially increase value for BSNL:

• BSNL can benefit from economies of scale generated by Indian players already utilizing this band, leading to affordable and tested low-cost devices for BSNL's customers.
• BSNL can utilize the 700 MHz band for Standalone (SA, pure 5G) deployment without the need for a disruptive transition from its 4G networks.
• BSNL can even consider migrating all its GSM subscribers from the 900 MHz band, freeing up this spectrum for Bharti and Vodafone Idea. This would enable them to smoothly transition to SA 5G, which is currently challenging due to the lack of available spectrum in the 900 MHz and 700 MHz bands.

The good news is that the 800 MHz band has plenty of unused spectrum. In the previous auction, all of it was offered but found no takers. So why not utilize this resource in the best interest of the country instead of wasting it unnecessarily?

Conclusion

Considering the points discussed, it is evident that BSNL's revival plan falls just short of reaching its goals. It is essential for the country and its consumers that BSNL remains competitive and doesn't give up prematurely. Furthermore, this proposed plan would benefit other players like Bharti and Vodafone Idea, as they would have the opportunity to deploy pure (SA) 5G by gaining access to the airwaves vacated by BSNL in the 900 MHz band over time. This can easily happen if BSNL successfully transitions all its 2G subscribers (in the 900 MHz band) to 4G in the 800 MHz band, as its 4G network becomes more widespread and mature.

India requires pure 5G (Standalone 5G) because the experience with Non-Standalone 5G at the network edges is currently subpar and inconsistent due to subscribers moving between 4G and 5G. This is mainly due to the limited coverage of the 3.5 GHz band, which is a crucial 5G band for NSA operators.

India and its customers deserve the best possible outcome, especially when executing this plan is relatively straightforward, given the substantial amount of unused spectrum in the 800 MHz band. Therefore, it would be wise to utilize this valuable resource in the best interest of the country.