CAG to look into BSNL franchise deals

Government auditor CAG has sought information from Bharat Sanchar Nigam Ltd about its franchise deals to lease out expensive WiMAX spectrum for broadband services. The development came within weeks after the Department of Telecommunications decided to examine the matter, following an order from minister Kapil Sibal.

The DoT and CAG developments come in the wake of reports of revenue loss and misuse of WiMax licences.

WiMax, or worldwide inter-operability for microwave access, is a technology that offers high speed internet access with fast data downloads.

BSNL had paid Rs. 8,314 crore (Rs. 83.14 billion) for Broadband Wireless Access spectrum. To use this, it opted for a revenue-sharing franchisee model.

According to sources in DoT, BSNL has already received letter from the CAG, asking for all the details pertaining to its WiMax deal - franchisee selection process, revenue share model and what it has got so far.

BSNL, which is facing huge financial losses, is also losing heavily due to the controversy over its WiMAX franchise, as it is delaying roll-out of the service. BSNL had got the BWA spectrum at least three years ahead of the private operators, but is yet to achieve any substantial subscriber base.

Private companies got the BWA spectrum only in 2010, through competitive bidding. The controversy over selection of franchise had delayed the whole process of roll out.

BSNL had selected five franchise companies to offer WiMAX services across the country. Of the five companies, four were allegedly selected through a detailed process but one, SOMA Networks, is charged with getting a contract (in end-2007) without this.

The other companies say SOMA used "political clout". SOMA says the companies selected lack experience in WiMAX.

The SOMA franchise was to roll out WiMax services in three A-category telecom circles: Andhra Pradesh, Maharashtra (including Goa) and Gujarat.

When the agreement was signed with them, BWA spectrum had not been auctioned and its price was not known. It took till 2009 for BSNL to come with an ex-pression-of-interest process and select for others - Teracom, Take Solutions, Adhishwar and Starnet.

Wimax or Worldwide inter-operability for microwave access is a technology that offers high speed internet access with fast data downloads.