ECONOMICS PRESENTATION

TOPIC- BSNL PREPARED BY-

JIGAR PATEL

A.P.ANU

SUJAL SHETH

2Apr 8, 2023

CONTENT

Introduction Factors of production Demand determinant Supply of services Cross elasticity of demand Income elasticity of demand Perfect competitive market Market failure and

inefficiency opportunity cost Consumer surplus producer surplus impact of government

surplus

3Apr 8, 2023

INDIAN TELECOM SECTOR

India is the second largest telecom industry after China( subscriber base), with lowest tariff rate.

It is contributing 2.71% to the total GDP.

Subscriber base is growing as 6 million every month.

4Apr 8, 2023

INTRODUCTION

Formed in october,2000

World’s 7th largest Telecommunications Company

District headquarters covered- 618

No of villages covered- 5.5 lacs. No of towns and cities covered-

22655 According to June 2009-

a) wire line subscriber- 28.79 million

b) wireless subscriber – 54.36 million

It is committed to provide quality Telecom Services at affordable price to the citizens of the remotest part of the Country.

 

5Apr 8, 2023

Conti….

Services provided- Wire line, CDMA mobile GSM Mobile Internet,

Broadband Carrier service MPLS-VPN VSAT VoIP services IN Services

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FIXED LINE STRUCTURE

7Apr 8, 2023

VISION, MISSION AND OBJECTIVES

VISION

To become the largest telecom Service Provider in  Asia.

MISSIONTo provide world class State-of-art

technology telecom services to its customers on demand at competitive prices.

To Provide world class telecom infrastructure in its area of operation and to contribute to the growth of the country's economy.

8Apr 8, 2023

OBJECTIVESTo be the Lead Telecom Services Provider.To provide quality and reliable fixed

telecom service to our customer and there by increase customer's confidence.

To provide point of interconnection to other service provider as per their requirement promptly.

To facilitate R & D activity in the country.

9Apr 8, 2023

GLOBAL SCENARIO

Business has been changed since 2000.

Earlier most lines in service used wires and carried voice.

74 % of all lines in service used wireless access or carried data.

Mobile revenues account for nearly half of all telecommunication revenue.

People are using mobile as a primary voice device while the landline is a backup device.

10Apr 8, 2023

British Telegraph

Service 1852

P & T 1947

Postal Service 1985

DOT 1985

MTNL 1986 VSNL 1986BSNL

October 2000

Overview

11Apr 8, 2023

INDIAN SCENARIO

Fastest growing sector in India. Revenue Rs.39,108crores( June 2009) Total 479 million phone connections ( July

2009) 441.66 million connections are wireless. 37.34 million connections are wire line. Total Teledensity is 3.22 as per June

2009. Urban teledensity 7.87 and rural

teledensity is 1.26.

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EXPECTED GROWTH TILL 2012

Fixed line subscriber is expected to reach 45 to 50 million driven by broad band growth.

Mergers and acquisitions are expected to reduce the number of operators to 5-7.

Broad band subscriber base 25-30 million.

Internet subscriber base 45 million.

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CONT……..

Rural market will be the next growth driver with the near saturation of urban market.

The network will be made fully digital. Providing telephone connections in

villages as per government policies.

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ALL INDIA WIRELINE DISTRIBUTION OF BSNL

A & Nico; 0.25 AP; 24.59

Assam; 4.30

Bihar; 14.19Guj; 21.28

Haryana; 9.23HP; 4.14

J & K; 2.59

Karnataka; 23.15

Kerala; 35.86

MP; 14.67Mahara; 34.64Neast; 3.42

Orissa; 7.68Punjab; 14.25

Rajsthan; 15.64

TND; 33.47

UP (E); 14.54

UP (W); 12.69WB; 24.92

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CUSTOMER SERVICES

For help line toll free numbers are there.

All customer service centers are open from 8 to 8.

Online payment facility. Time to time new plans and

schemes are introduced.

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FACTORS OF PRODUCTION

Employees and labors

Technology Raw material and

machineries

a) copper wires

b) telephone instruments

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IMPACT OF CHANGE IN FACTORS OF PRODUCTION

Change in the technology affects the most to the services of BSNL.

There is an continuous increase in the employee recruitment, which affects the expenditure of providing the services

Change in the price of raw materials affects the service providing tendency

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DEMAND DETERMINANT

Price – elastic Income - elastic Emerging

substitute goods Taste and

preference Accessibility of

services

19Apr 8, 2023

CHANGE IN THE DEMAND

Year Landline Mobile Rate

1997 14.54 0.34 200-500kms

1998 17.6 0.88

1999 21.59 1.2

2000 26.65 1.88 16

2001 32.65 3.58 12

2002 38.33 6.68 5

2003 40.91 13 5

2004 40.92 33.69 4

2005 41.53 52.22 2

2006 41.54 98.77 2

2007 40.75 165.11 1

20Apr 8, 2023

CONTI…..

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

0

20

40

60

80

100

120

140

160

180

0

2

4

6

8

10

12

14

16

18

Price Elasticity

LandlineMobileRate

Year

Mo

bil

e

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EXPLANATION

In the year 2000, the rates were at peak.

After 2000, there has been a constant decrease in the rates.

After 1997, there was an increase in the rates in the BSNL landline services.

From the year 2002, the rates of the landline service remain constant till 2006.

But later on it started declining. Demand for fixed phones depends

on the relative prices of access and usage of fixed and mobile phone services.

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SUPPLY OF BSNL SERVICES

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EXPLANATION

In 2004, the wire line was more than the wireless services.

After that every year it declined constantly.

In the year 2009, the wireless increased 12 times more than the wire line.

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CROSS ELASTICITY OF DEMAND

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

0

50

100

150

200

250

300

350

Private OpPSU

25Apr 8, 2023

INCOME ELASTICITY OF DEMAND FOR BSNL SERVICES

June - 08

Sep - 08 Dec - 08 Mar-09 June-090.00%

20.00%

40.00%

60.00%

80.00%

100.00%

29.10% 28.60% 28.20% 27.90% 27.50%

70.90% 71.40% 71.80% 72.10% 72.50%

Wireline Market Share-Rural &Urban

UrbanRural

26Apr 8, 2023

EXPLANATION

The income from the urban areas has increased constantly in the wire line market.

In 2008 it was 70.90% and in the year 2009 it came to 72.50%.

But the market share of the rural areas has decreased in these two years.

From 29.10% it reduced to 27.50%.

27Apr 8, 2023

MONOPOLISTIC COMPETITION MARKET AS PER JUNE 2009

BSNL; 76.73

MTNL ; 9.46

Bharti ; 7.54

Reliance; 3.01Tata/ Hughes ; 2.53 HFCL ; 0.43 Shyam ; 0.29

28Apr 8, 2023

EXPLANATION

We consider BSNL as having the Monopolistic competitive market.

Earlier it was a monopoly of the Government.

There entered many players like Reliance, Tata, Bharti, MTNL, HFCL and Shyam.

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BSNL AS A MARKET FAILURE AND MARKET INEFFICIENCY

Improper allocation of resources

Externalities

Inequitable distribution of resources.

30Apr 8, 2023

OPPORTUNITY COST

Year Direct Exchange Line

DELs added annually

Waiting List

2000-200132436.10 5924.80 2947.06

2001-200237848.20 5412.00 1685.87

2002-200340060.50 2212.30 1810.07

2003-200440566.50 506.00 1798.96

2004-200541102.40 535.90 1588.89

2005-200641378.30 275.90 1218.93

2006-200740753.40 -788.90 1036.75

31Apr 8, 2023

CONSUMERS SURPLUS

Different types of plans being introduced

Providing services to the rural and remote areas at a relatively cheaper price

Providing rebates to the customers for paying annual rent in advance

Providing free caller id instruments to the customers

32Apr 8, 2023

PRODUCERS SURPLUS

Up to 2006, government was giving compensation on IUC( Inter usage charge).

Government is paying BSNL for providing telephone services as VPT ( Village public telephone) to the villages.

USOF( universal service obligation fund) by the Government for providing services

33Apr 8, 2023

VARIABLE COST

Remuneration cost- Expense on staff has increased as Rs.3848 crore in 2001- 02 to Rs. 11,363 crore in 2008-09.

It is approx 35% of the revenue.

Operating , administrative and other expenses are also approx 35%.

Expense is increasing year after year.

34Apr 8, 2023

FISCAL POLICIES

BSNL has to purchase 60% of its equipments from the public sector units(ITI).

“ 1*6 rule” introduced by Income tax department.

Reduce the percentage of Access deficit charge.

Payment of license fee.

35Apr 8, 2023

MONITORY POLICIES

36Apr 8, 2023

INDUSTRIAL POLICIES

Earlier it was the monopoly of Government sector, but later on in 1991 due to privatization and liberalization it got opened for the private players.

Under, the USO( Universal service obligations) the service providers are subsidized for their network expansions cost in rural and remote areas.

Low utilization of subsidies by USO.

37Apr 8, 2023

RISK AND UNCERTAINITIES INVOLVED

USO’s focus has been diverted from the fixed phones to the mobile phones

Recovery of customers payment is uncertain.

Due to 1*6 rule, many subscribers disconnected their landline connections.

38Apr 8, 2023

Cont…..

Political instabilityEconomic instability. Urban area market

saturation.Marketing skills are below

average.

39Apr 8, 2023

IMPACT OF GOVERNMENT POLICIES

Earlier license fee on fixed line was exempted

Bundling of fixed line wire

mobile number portability

Spectrum charge – allotment of radio frequency

Octroi , custom duty, excise duty, stamp duty and other local taxes by state government.

40Apr 8, 2023

SUGGESTIONS FOR IMPROVEMENT

Excessive non executive employees should be given voluntary retirement or should be continued on contractual basis.

Services should be more quick for customer satisfaction.

41Apr 8, 2023

Cont…

Awareness of services and their cost for subscribers is essential to promote the higher utilization of the provided services.

Reexamination of present design of subsidization.

Need improvement in its marketing strategies.

42Apr 8, 2023

BIBLIOGHRAPHY

Dot.gov.inBsnl.co.inTrai.in

43Apr 8, 2023

CONCLUSION

Till date there has been no ultimate substitute of wire line services

giving the full satisfaction to its

customers.

Though the wire line service is reducing at a very fast pace, but it

will not vanish completely in the

coming future.

44Apr 8, 2023

Thank You