Fall of BSNL and rise of Reliance Jio in India ..

Of late with the spectacular growth of the private sector Reliance Jio in the global telecommunications scenario, the issue of the rise of private organisations and fall of governmental organisations in different sectors of the Indian economy has come to the fore. This case points to the role of a senior employee in the Indian telecommunication public sector giant BSNL Sunil Chandran who has seen the rise and fall of BSNL.

A. Introduction

Bharat Sanchar Nigam Limited (BSNL) set up in 2000, is the national body in India that has been providing telecommunications infrastructure and facility to the people across India. (Click here for the wikipedia link). It was hived off from the Department of Telecommunications and to differentiate it from Videsh Sanchar Nigam Limited (VSNL).

B. Role of Governmental Organisations

In early 90s in Goa, while working at Govt College of Engineering, I had to wait for 3 years to get a home telephone line after giving an application to the Dept of Telecom. 

How situations keep changing ..

My parent organisation being a governmental organisation,  I was a privileged customer and got the home connection in 1995. Imagine the plight of the hapless private customer and citizen of this country..

BSNL being a govt organisation, it flexes its muscles quite often in resource allocation. As they always find excuses when asked about their deficient cistomer service, their common refrain was that government organisations have its limitations. But we cannot forget one fact that this limitation also gives them great freedom for action.

The government and all organisations under it is meant to serve the public. If these constraints prevents one from serving the public, then that organisation should not be in public service, simple.. BSNL failed to understand this market reality ..

C. ISRO as a governmental entity :

As an example, ISRO as a governmental organisation was set up in early 60s and is one of the most respected space organisations in the world.. It had least customer interaction and that gave it great freedom. 

Leadership also played a major role. Nehru in 1961 gave Dr. Vikram Sarabhai the responsibility of setting up a space organisation in India and in 1962 was born INCOSPAR (Indian National Committee for Space Research) which in 1969 became ISRO. Leadership made the difference..

BSNL at a point of time held monopoly and they thought they could continue like that into the future. They forgot that their master is the customer, not the other way round. Situations are so dynamic, it keeps changing overnight. In a matter of a decade or two, the scenario has changed. 

D. The Reliance part of the story ..

Reliance initially was in petrochemicals only. What made them venture into telecom ? It was the inefficient utilisation of resources and a tendency to have a stranglehold on the public of this country through monopoly in telecommunications which has been broken up.  

I agree BSNL was innovative, but why couldn't it maintain its hold over the public ? Heavy Corruption and utter disregard of their customers.. The senior leadership in BSNL has to take the responsibility of this downfall.

Why is Reliance unbeatable in global telecom and how did they beat BSNL ??

My two cents ..  BSNL was innovative in bringing many technological developments for the first time in India, but

• BSNL failed to carry out timely market interventions and convey their plans to the people
• Even though BSNL had a large captive customer base, their service was poor and slow
• Even though BSNL was the cheapest, Reliance undercut them and for the first time in the world gave local calling free across the country.
• Jio brought Innovation in offerings and scale to operations 
• Reliance spent $31 billion upfront in providing massive optical fibre communication infrastructure across India, nobody in the world has invested like Reliance.

The result is they are the FIRST telecommunications company in the world to offer for the first time free national calling with roaming within the country . No Japanese, Korean, Chinese or US company can catch up with Reliance now .. 

E. Reliance style of operations or operations strategy 

Reliance Operations Strategy, both in Petrochemicals and Comunication has been to

• plan and invest heavily in huge infrastructure. 
• start small
• scale up rapidly with sure firm steps
• keep costs low
• capture the market

Just on the basis of agility and huge infrastructure they are unbeatable in the world.

It's a big lesson and case study for MBA students. 🙏🙏

George..

This academic note has been written as a case trying to differentiate between the Operations strategy of governmental and private organisations in India. (click here for the case and detailed teaching note)