Reliance Jio cries foul over tender rules of govt funded telecom projects

Reliance Jio has alleged that tender norms mandating use of 2G technology for government funded mobile service projects will favour incumbent operators and cause financial loss of around Rs 5,000 crore to the public exchequer, according to sources. The Mukesh Ambani led firm has also written letter to Universal Service Obligation Fund Administrator Sanjay Singh and marked it to telecom minister Manoj Sinha and telecom secretary Aruna Sundararajan seeking their intervention for removing the clause.

"...We are hugely disappointed by USOF Administration's decision to continue with extremely unfair, arbitrary, discriminatory, restrictive and retrograde mandate to use 2G technology for voice in its recent tender for Andaman and Nicobar Islands despite numerous reasons for not mandating a legacy technology," Jio said in the letter, seen by PTI, dated June 25, 2018.

The telecom department in June first week invited bids to install 214 mobile towers in Andaman and Nicobar islands (ANI) in uncovered villages and on national highways for providing 2G and 4G services. The project will be funded by the government through USOF, which is corpus created from money paid by telecom subscribers as part of their every call. Jio said that mandatory 2G rollout is discriminatory in nature and is bound to prohibit participation of 4G operators in the bid.

Jio in the letter alleged that the project with mandatory use of 2G technology will be used by incumbent operator with 2G networks to deploy their old and wasted network equipment in ANI while they upgrade their networks to 4G in other parts of the country. The USOF wing, which is managing the project, has also proposed similar clause for telecom connectivity project in naxal affected states and unconnected villages in the Northeast.

Jio representatives in pre-bid meeting held on June 19 have alleged that the extension of clause for telecom infrastructure rollout project in naxal affected area and Meghalaya alone will add to Rs 5,000 crore financial loss to the public exchequer. "The restriction on latest technology would also impact cost efficiencies as there will be at least 30-40 per cent incremental cost addition...For example, in ANI tender itself, the government could save around Rs 100 crore and possibly more, if this restrictive condition of the tender gets removed," the letter said. 

It said that 2G has reached to its end of life, where a large number of developed and developing countries have already completely switched off their 2G networks and over 75,000 mobile towers on 2G technology have been shut down in India. "With no advantage in terms of additional service or otherwise, the present bid condition for mandatory 2G rollout is bound to cause additional losses in both capex as well as opex," the letter said.

Jio played down arguments of USOF, which comes under the telecom department, that 2G is required for economical handsets and point-of-sales machines. It said that areas to be covered under USOF project are uncovered areas and therefore there is no likelihood of any customer within these areas holding a 2G only handset and at present there is almost nil differential in 2G and 4G handset prices.

"The tender, in the current form, is bound to result in virtual monopoly of few incumbent operators, causing huge loss to the tune of thousands of crores to the exchequer," the letter said. Email query sent to DoT and Jio elicited no immediate response.