Synergistic Spectrum Alliance: Crafting a Competitive Edge for both BSNL and VI
The partnership between BSNL and VI is a tangible strategy that, if executed, promises mutual benefits and will bolster market competitiveness for both entities.
Introduction:
Amidst the rapidly evolving telecom landscape, BSNL stands at a crossroads. The recent communication to the telecom minister, sourced from the union of BSNL and reported by MoneyControl, brings to light a strategic proposal that could alter the company's trajectory. This note endeavours to articulate the potential of this proposal and the tangible benefits it could yield for both BSNL and VI.
Current Challenges and the Union's Proposal:
As per the details furnished in the Economic Times, the BSNL union has made a direct appeal based on pragmatic considerations—primarily the government's significant shareholding in VI. With the advent of 5G technology, BSNL's lack of a 4G service offering has triggered an exodus of customers. The urgency of this situation is encapsulated in the words of P Abhimanyu, General Secretary of the BSNL employees' union, who advocates for immediate action leveraging VI's 4G network to stem the tide of customer loss. The chart below paints the BSNL’s customer loss trends.
From December 2022 to November 2023, BSNL has witnessed a staggering decline in its subscriber base, haemorrhaging 15.6 million users—a concerning 14% of its total customer base. Should this downward trend persist, projections indicate a grim future: BSNL's subscriber count is poised to plummet by a full 30% relative to its December 2022 figures, diminishing to a mere 80 million. This contraction would not only shrink BSNL's presence but also reduce its market share to a precarious 6.7%, signalling a critical juncture for the company's operational stability and market position.
Spectrum Analysis and Integration Challenges:
To thoroughly comprehend the intricacies of spectrum allocation and the operational hurdles of network integration, we embark on a detailed examination:
900 MHz Band Spectrum Analysis:
Our analysis indicates that VI's spectrum in the 900 MHz band is substantial, providing a solid foundation for BSNL's proposed 4G service rollout. However, there's a caveat—integrating the 2G networks of BSNL and VI is a complex venture, encumbered by technical discrepancies owing to the involvement of disparate equipment vendors. Such a merger of technologies, while theoretically possible, could encounter formidable challenges, making it an unlikely solution. Hence, both BSNL and VI should continue to serve their 2G customers independently without tight integration given this challenge.
1800 MHz Band Spectrum Analysis:
The 1800 MHz band offers a promising opportunity for strategic enhancement. It boasts ample spectrum to support a substantial 4G subscriber base, making it ideal for the implementation of a re-farming strategy. This approach would facilitate the migration of VI's 2G user base to the 1800 MHz band, thereby freeing up the 900 MHz spectrum exclusively for 4G services. Such an optimization would not only prevent a capacity crunch but also provide the necessary bandwidth to accommodate BSNL's expanding customer base, ensuring a seamless service experience.
2100 MHz Band Spectrum Analysis:
The analysis of the 2100 MHz band reveals that both BSNL and VI possess an abundance of spectrum across numerous circles, presenting a significant capacity for network enhancement. Given the complexities involved in full network integration, a pragmatic approach suggests that BSNL should consider leveraging VI's network infrastructure rather than embarking on a comprehensive merger—a strategy that is likely acknowledged by the technical teams of both entities.
Thus, it becomes evident from our discussion that VI's spectrum resources are more than adequate to support BSNL's subscriber base. With substantial holdings in the crucial 900, 1800, and 2100 MHz bands—key to robust 4G service—the possibility of enhancing BSNL's offerings becomes palpable. While 2G services for both operators can remain independent, the transition for BSNL customers between 2G and 4G networks might face hiccups without a more integrated network solution.
What does Vodafone stand to gain?
The potential for Vodafone Idea (VI) to benefit from BSNL's access to its 4G network is substantial, setting the stage for a mutually beneficial arrangement. To capitalize on this, BSNL should halt its 4G deployment and pivot towards rolling out 5G services, given its access to the coveted 700 MHz band. This band, while less effective for 4G due to a sparse ecosystem of compatible low-end devices, is prime for 5G given its superior propagation characteristics. Readers and dig into details in my earlier article - BSNL’s Revival Plan — Falling Just Short of the Finish Line.
VI, which has yet to deploy a 5G network, could leapfrog this limitation by utilizing BSNL's network. This would enable VI to offer 5G services over lower frequency bands, thereby eliminating the constant switching between technologies for customers—a common issue for networks operating solely on the mid and high-frequency bands (3500, 26 GHz bands), known for their poor indoor penetration.
Leveraging the 700 MHz band, a stronghold of BSNL, VI can deliver consistent 5G connectivity without the significant capital expenditure of establishing its own pan-India 5G network. It's a strategic move that could save VI considerable resources, allowing it to focus on enhancing customer experience and service quality. In essence, by integrating their unique strengths—BSNL's low-frequency spectrum and VI's existing 4G infrastructure—both companies stand to gain considerably. This collaboration could redefine their market positions, ensuring that both BSNL and VI emerge as formidable players in the 5G era.
In summary, the proposed solution offers a clear, strategic path forward:
a) BSNL's customer base should utilize VI's robust 4G network, reverting to BSNL’s 2G network when necessary, albeit with a hard handoff.
b) BSNL would be wise to cease 4G investments and pivot to deploying 5G using the valuable 700 MHz band, a move that not only aligns with future-proofing but also circumvents the need to dismantle a nascent 4G network in favour of 5G in the same spectrum.
c) VI should harness BSNL’s nascent 5G network in the 700 MHz band to deliver high-quality 5G services, leveraging the band's superior reach and coverage compared to medium and high-frequency bands.
d) Concurrently, BSNL should expand its 5G deployment into the 3500 MHz band, ensuring that the 700 MHz spectrum does not become a capacity constraint.
e) This approach also accommodates BSNL’s 4G customers with lower-end handsets, as both 900 MHz and 1800 MHz bands support low-end devices costing less than Rs 4K, quite unlike the 700 MHz band.
f) The beauty of this solution lies in its simplicity: it avoids the complexity of tight network integration, enabling the provision of 4G and 5G services in a non-integrated, yet efficient manner.
Conclusion
In essence, this strategic alliance between BSNL and VI is not only innovative but also pragmatic. It leverages existing assets and capabilities, minimizes financial risks, and fast-tracks the rollout of 5G services. By focusing on their respective strengths and market needs, BSNL and VI can deliver enhanced connectivity without the hefty investment typically associated with network upgrades. This approach represents a shrewd adaptation to the dynamic telecom landscape, promising a sustainable future for both entities in the digital era.