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Thomas K. Thomas

New Delhi, Aug. 28 Private cellular operators on Friday opposed a potential move by the Government to ban Indian telecom companies from buying equipment from Chinese manufacturers Huawei and ZTE.

In a meeting called by the Department of Telecom to discuss the issue, both GSM and CDMA players told the Government that a ban on Chinese vendors would be detrimental to their business as most operators have a procurement deal with Huawei and ZTE.

While the DoT did not take a decision on the matter on Friday, it will now consult the Ministry of Home Affairs before taking the next step.

Bharti Airtel’s CEO and Joint Managing Director, Mr Manoj Kohli, and Tata Teleservices’ Managing Director, Mr Anil Sardana, were among those who attended the meeting.

Senior DoT officials told Business Line that detailed guidelines on security related issues will be given to the operators instead of amending the licence norms, in which case it would have become mandatory in nature.

The DoT had proposed to impose a ban on Chinese vendors in 20 circles, considered to be sensitive with international borders with unfriendly countries. DoT sources said that it may reduce the number of circles to 14.

The Ministry of Home Affairs had raised concerns against telecom operators deploying network equipment manufactured by the Chinese vendors on the grounds that it may have spyware or malware built into it capable of tracking voice and data traffic from a location outside the country.

But operators are not in favour of banning the Chinese vendors as it gives them a cheaper option vis-À-vis European companies such as Ericsson and Nokia Siemens.

Most of the new players such as Sistema Shyam have given contracts to the Chinese vendors due to their attractive pricing.

Even established players use low price quotes from Chinese vendors to get a better deal from the European vendors.

The majority of CDMA equipment in the country is being supplied by the two vendors. “A ban on Chinese vendors will mean that we will be forced to buy equipment from Ericsson, Nokia Siemens or Alcatel Lucent and that reduces not just our options but also brings down the competitiveness in the telecom equipment market,” said a GSM player.

Chinese vendors have been blacklisted already by State-owned Bharat Sanchar Nigam Ltd after the Intelligence Bureau asked the operator not to buy equipment from Huawei or ZTE. In the recent 93-million-line GSM contract, BSNL refused to give orders to Huawei in the West Zone despite it being the lowest bidder.

The operators, however, agreed to other security measures suggested by the DoT including asking all foreign vendors, offering managed services, to get security clearance from the Ministry of Home Affairs every two years of operation. This means companies such as Ericsson, Nokia Siemens and Alcatel Lucent, which is managing networks for mobile operators like Bharti Airtel and Vodafone, will have to take clearance from the Home Ministry.

The DoT had initially proposed that vendors should hand over the network back to the operators after two years. But cellular operators raised concerns on such a move and told the DoT that outsourcing network management has become part of the low-cost business model in India and reversing it could have major ramifications on the tariffs offered to the consumers.

The DoT has also told the operators that they should ensure that all systems, irrespective of origin of manufacturing, extensive security audit should be carried out so that the network is free from trapdoors making it susceptible to remote tracking.

“A self-certificate to that effect should be submitted to the DoT for carrying out the security audit,” said a DoT official.

More Stories on : Telecommunications | Regulatory Bodies & Rulings | Security

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