The revival plan for BSNL and MTNL does not inspire confidence

Worried about the future of the public sector entities, the government has crafted a revival plan, including a merger of BSNL and MTNL. In management jargon, the merger could potentially unlock synergies, but unfortunately there appear none on the telecom horizon.

The natural monopoly character of telecommunications has been decidedly undermined by wireless technology. (Photographer: Jason Alden/Bloomberg/File)

The early logic of public provision of telecommunications services in India was justified on grounds of market failure and employment creation. Market failure meant the private sector would either not be interested in provision especially in far flung rural areas or monopoly conduct would flourish unchecked in areas it did serve. The widespread distrust of the market and private enterprise obliged the government to supply telecommunications services. And in the absence of a meaningful social security architecture, the department of telecommunications (DoT) along with other public sector enterprises, became employers, not only of “last resort” but also of “first choice”. The security of a government job and its associated benefits are enticing even today, even though the economy is vastly different and private enterprise is truly established.