INDIA BUSINESS WORLD - OCTOBER 2006
THE MONTH THAT WAS...

MOTOROLA TELLS COURT IT QUOTED RS 3,500 CR LESS THAN ERICSSON

  Motorola has informed the Delhi High Court that its bid was Rs 3,500 crore lower than that of Ericsson which is all set to bag the mega GSM equipment tender of BSNL. Ericsson has quoted a price of around Rs 22,594 crore for supplying equipment and setting up a network of 45.5 million lines. A Rs 3,500-crore gap means that Motorola's price is about 15% less than that of Ericsson.

   If Motorola was not rejected for not meeting ‘technical' conditions, then Ericsson would have emerged as the lowest bidder. If Motorola was in contention, then Nokia would have been ousted from the race along with Siemens.

   There is already a quota for ITI which has partnered with Alcatel for this project. ITIAlcatel has already got an order of 18 million lines. Motorola approached the Delhi High Court on Monday, seeking a stay on opening of financial bids on the grounds that it was not informed of the disqualification of its bid on technical grounds.

   BSNL has not officially announced the price quoted by the three qualified vendors — Ericsson, Nokia and Siemens. Ericsson has announced that it has emerged as the lowest bidder in the tender for 45.5 million lines.

   Sources said Ericsson has quoted a price of about Rs 7,796 crore for phase I of the project, Rs 7,375 crore for phase II and Rs 7,423 crore for phase III of the project. The total of all the three phases is Rs 22,794 crore. The tender conditions envisaged that the lowest bidder would get 60% of the total quantity while the second lowest bidder would get the remaining 40%.

   Nokia, the second lowest bidder among the technically-qualified players, has quoted a much higher price than Ericsson. However, as per tender conditions, the second bidder would be required to match the price quoted by the lowest bidder.Siemens, having quoted the highest price, is unlikely to bag any order from BSNL. However, Nokia and Siemens have announced the merger of their mobile and communication infrastructure divisions. The merger is expected to be approved by January.

INDIA will soon address the China factor so that telecom network equipment provided by companies such as ZTE and Huawei are not viewed as a security threat. Sources say that even in the recent BSNL tender for 45.5 million GSM lines, ZTE and Motorola were disqualified on account of their sourcing equipment from China. India is therefore likely to follow the UK model, where all telecom vendors get their products certified by the government, before the equipment is mass produced and distributed to service providers.

The first step towards this will see the setting up of the The Indian Centre for IT Security Product Certification, the body that will carry out the testing on a government-controlled test bed, and be responsible for the national IT security certification. The plan also envisages that the Indian centre, when set up, “will establish collaboration with such countries such as the UK and share knowledge and data for mutual benefit”. An earlier DoT note on the issue while refusing to name the vendors states that the move is essential “with the arrival of new names in the equipment vendors space, which are of ‘suspect origin', but extremely competitive in cost with regard to telecom tenders”. Interestingly, China already has a similar certification centre — China Information Technology Certification Centre, which maintains national evaluation and certification scheme for IT security.

According to sources, India's concerns with vendors of “suspect origin” was based on the fact that these companies were likely to install back door entries and remote login facilities, and not reveal the same to service providers here. The vendors can then use these loopholes to “bring down the network if the relationship between the company and the customer or the relationship between the supplier's nation and the customers nation becomes sullied,” sources said.