However, with passing time and the entry of more private players, competition increased in the telecom market. Further, the government liberalized the FDI policies for the telecom industry by raising the bar of foreign investment from 49% to 74% in 2004-2005, which resulted in an influx of foreign companies into the Indian telecom market. Entry of foreign players in the market led to capacity creation, and better infrastructure, which in turn improved the network quality.
During the time of introduction of cellular phones, the outgoing call rates were to the tune of Rs. 16 per minute and incoming calls were also heavily charged. However, the competition also resulted in a sharp reduction of telecom tariff.
Analysts believe that BSNL, which once enjoyed supremacy, failed to compete with the private operators, and with every financial year, its losses went on adding up. Today, the state-run telecom company is known to be a sick PSU - with BSNL posing losses in the last three fiscal years now. With a subscriber base of 97.7 million, it trails Bharti, Vodafone, Reliance Communications, Idea Cellular and Tata Teleservices.
It is expected that BSNL may suffer a loss of around Rs 7,000 crore in fiscal year 2011-12. During the year 2010-11, the company's net loss stood at Rs 5,997 crore.
But BSNL is trying to turn things around. BSNL subscribers often complain about the poor network and unsatisfactory services, however, the minister of state for communications and IT Milind Deora, on the first day of the monsoon session said in the Lok Sabha, claimed that the government-run compnay is not losing subscribers to private service providers. Furthermore, it's not just BSNL subscribers face issues of calls dropping, call disconnection, and weak signals. There are many areas and regions in the country where private operators have the license to operate but their signals are weak or even non-existant.
Deora also assured parliamentarians that BSNL is meeting the Quality of Service (QoS) benchmarks prescribed by the telecom regulator TRAI.
In an effort to increase its revenue, BSNL is getting into agreements with private players for sharing its over 70,000-strong tower infrastructure. As per media reports, the company is close to reaching a pact with Reliance Industries (RIL) subsidiary Infotel Broadband to improve services. In general, things are looking up for BSNL.
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