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August 2017

BSNL OFFERS TO PARTNER LCOs FOR BROADBAND



State-run BSNL has an outstanding debt of over ₹ 7,600 Crore. The public sector telco has been looking for innovative ways to increase revenues.

BSNL has agreed to franchise its mobile phone service to VNOs to re-brand and market.

To promote its broadband operations, BSNL Thiruvananthapuram reportedly met Local Cable Operators (LCOs) & offered them a generous scheme to partner and share broadband revenues.


BSNL-LCO OFFER

BSNL has reportedly asked Thiruvananthapuram LCOs to retail BSNL branded broadband, under the following terms:

1. 10 year Agreement must be executed by the LCO with BSNL, including a ₹ 30,000 Bank Guarantee / Security Deposit.

2. The LCO receives 40% of revenues, after deducting GST, AGR & TDS.

3. The LCO must achieve an annual revenue target of atleast ₹ 2 Lakhs for the First year and 4 Lakhs each year thereafter. 50 % of the security deposit will be deducted, if the LCO fails to meet his target in any year.

4. LCOs operate in areas on a Non-Exclusive basis. BSNL may appoint multiple LCOs to retail its broadband, within the same area.

5. BSNL will pay the LCO's revenue share via bank transfer, after deducting TDS.

6. While all BSNL plans are offered, emphasis will be on plans priced above ₹ 1,000 per month to the consumer.

7. Existing BSNL Customers also can be shifted to the LCO, if the customer is upgraded to a higher cost plan.

8. Link will be provided by BSNL to the LCO's OLT, from the nearest Exchange/ BTS

9. ONU/ Wifi Router Charges to be collected from customer, but the LCO must maintain the ONU/ WiFi Router.

10. Upgradation of ONU is at the LCO's cost.

11. Billing to the end customer & receipt of payments from each customer will be done directly by BSNL. LCO can also collect on BSNL's behalf and submit to BSNL.

12. Complaints must be closed within 6 Hours by the LCO, or a penalty of 1 days rent, per day of downtime will be levied on the LCO.

13. Web support will be given to LCO in future.

14. OLT Vlan tagging required if provided for Multiple ISPs

15. An LCO is not allowed to provide broadband connections into another district by taking feed/ Link from one District.

16. Voice service / Telephone can also be given by using BSNL's SIP server / Android App.

17. LCO can provide connections to Corporates and Govt. organisations also.




OBSERVATIONS

The profit share terms seem reasonable, but the following need to be highlighted:


LCO GETS PAID BY BSNL

The consumer is billed directly by BSNL and makes monthly payments also directly to BSNL. Even if the LCO collects cheques from the consumer, the cheques will be drawn out to BSNL.

Hence, the LCO is completely dependent on BSNL for his payments. Any computational lapse or delay by BSNL will adversely affect the LCO.


NO LICENSE REQUIRED BY LCO

The LCO is effectively acting only as a sales & collection agent for BSNL. The LCO does not offer his own broadband service, which is in fact branded by BSNL.

As a result, the LCO does not require any broadband ISP or VNO license, for this activity.


LOCAL SCHEME

The details outlined above are reportedly offered only by BSNL Thiruvananthapuram. Other BSNLs may or may not offer a similar scheme. If this scheme is a success, there is no reason why it will not be adopted by other BSNL offices n