NFTE BSNL THANJAVUR SSA

BSNL looks up despite loss - an Interview

BSNL reported a net loss of Rs 1,823 crore during the year 2009-2010. This is the first ever loss registered by the state owned telco since its inception in October 2000 when it was spun off from the Department of Telecom (DoT).
Kuldeep Goyal, former chairman and managing director, BSNL, has commented that an increase of Rs 4,000 crore in revenue would bring BSNL back into profits.
While in conversation with Telecom Yatra, N K Yadav, prinicipal general manager, value added services, BSNL, expressed that only broadband and value added services can offset the decline in revenues. He further said that while BSNL garnered Rs 2,000 crore from VAS last year, this year’s aim is to take this figure to Rs 3,000 crore.
Yadav also shared the telco’s expectations from 3G services and its expansion plans for rural areas.

Excerpts from the interview:
1. How good was the year for value added services and how much is VAS contributing to BSNL’s revenue?
Last year, the VAS revenue for BSNL was over Rs 2,000 crore which is about 20 per cent of the total revenue from mobile. If you see service-wise, then the major contribution is coming from ring back tones. SMS also contributes a major junk. Other popular services are interactive voice response based and STK-based, or menu driven services.
2. BSNL has also started offering 3G services in the past year. How has the response towards them been?3G services still are not very old and last year there was not much in 3G. Last year, 3G VAS contributed only a little above Rs one crore to the revenues. However, this year we have a good hope from 3G. Last year 3G was launched in very limited cities. The number has gone up to about 500 plus cities and we plan to scale it up to 1,000 cities in the next three to four months’ time.
We are expecting more than Rs 3,000 crore revenue from VAS this financial year. Out of this, revenue from 3G services should be about Rs 200 crore. We are also expecting a big jump in our data usage. Last year, it was about over Rs 200 crore and this year we are expecting about Rs 400 plus crore.
3. Anything specific you are doing to achieve this target?3G is one thing and the other is the normal subscriber growth. And we are going to introduce new services also, particularly on videos and clubbing video with other services such as text on videos etc.
4. Right now, BSNL is surrounded by a lot of problems and uncertainties, and the state of the company looks shaky. Is this affecting the company's VAS division in any way?No, not at all. We were reviewing our performance for the last quarter and I can tell you that our revenues in this quarter are much better than what they were last year. The growth is not too much, about five per cent. But this is also good, considering overall revenues are declining.
5. Do you think VAS can bail BSNL out?One thing I am certain about is that there is a decline in revenue...and as far as voice is concerned, you cannot stop it. So somewhere, something has to be substituted. In case of BSNL, I think one of our areas where we can get revenue is broadband. Broadband is classified in both fixed and wireless.
Second major component is VAS. This can only offset the decline so that we are retained at the original level at least. Otherwise, if they are not picking up, then anyways the decline is for sure. Then nobody can stop it.
But these two components I feel should be able to compensate whatever decline is coming from voice.
6. Do you agree that BSNL has an advantage over private operators since it received spectrum a year before other operators?See, 3G is all about video and when you say videos there are a lot of things involved. Firstly, our content needs to be organised in the right way. What I am trying to say is that suppose you have a video, it has to be made into at least three formats. One is slightly low resolution for 2G customers where I think even 2G should get an experience. Then, for 3G a slightly hi resolution format, and then a real high definition version for broadband users. So, right now our content is not formatted in that way and this has to be done progressively. Meta tags have to be put. This is helpful in case a user doesn’t want to see the full movie. With meta tags you can watch a particular song or a particular clip as well.
We are really working in this direction. Whatever content we have got we have to keep it properly - tag it properly, format it properly. Unless that is done, user experience will not come.
So I think that way private operators will have a little bit of advantage that vendors have already started working in this direction because of BSNL’s 3G services experience.
7. By the end of this year, private operators will also start rolling out 3G services. What kind of competition do you think they will give BSNL?Content is the driver for VAS. We now have our own portal BSNL Live, so we are trying to put more and more content on that and we are going forward with some different new agreements also, such as an application store. We are planning to launch it in the next quarter and this will have about 4,000 to 5,000 applications.
8. What are you doing on the mobile banking front?We are working with different banks. Already, we are working with SBI and recently had a tie up with Union Bank. Right now we are having some trials with Eko in Bihar.
9. How important are rural areas in your scheme of things?Rural areas present a lot of scope. We have some applications for rural areas, SMS and GPRS based, and we are trying to do more things for rural. We are right now in the process of tying up with Nokia for their Nokia Life Tools service. It will be a bundled offer and we are working at the commercials right now.
Currently, usage of VAS is not much in rural areas, even for SMS mainly because of language barrier. Rural areas need services which can be viewed ie, are in video format. These could be low resolution video clips. Even instructions for other services should be visually seen by people in these areas. Also, the services have to be useful for them to use. Nokia Life Tools is one such initiative.
10. What expectation do you have for the uptake of 3G services in rural areas?For rural areas, applications will drive the uptake. For example, Bollywood services will definitely have a demand even in rural areas. In such areas, an individual may not require the service but in every village three to four people can have 3G and then use it collectively. Business opportunities are definitely there and people will en-cash that. Application should give them definite gain in terms of money.
11. Will 3G subscribers gain prominence over 2G users after 3G roll out?No, in fact where 2G and 3G are concerned, there will be no difference in voice.
Data will be the key differentiator and even in data there are various things. Like if its just music download, 2G is good enough. I think the main differentiation would come when hi quality video is there. And then the small screen barrier is there. You cannot see a full movie on this. It is not possible. So it would be limited to short clips and all. So I think 2G will never die…at least not on mobile.
12. What are your expectations from VAS in the future?Right now, average revenue per user is going down very heavily. If you see our mobile revenues today, the voice-VAS ratio is 80:20. Five years down the line the ratio may not reverse but it will at least come to 50:50.
13. BSNL hasn’t been very active as far as promoting its VAS is concerned. What are you doing in this regard?We are developing a new website which will go in to the normal public domain. This website will talk about all the short codes and other things that user would need to activate and deactivate services and their tariffs. We would be launching it next month.

Strictly speaking, it’s not just for customers. Our main aim is to educate our network people ie our staff, our franchise, retailers, customer care people. We are also starting to promote VAS through our franchisees and retailers. Earlier, this was not done. Initially caller ring back tones, which are our most prominent service, would be promoted via these outlets.