Western firms flay tele-safety funding

Western telecom vendors in India have been desperately seeking to bend rules and refusing to abide by new norms for import of telecom gears largely because the government has made it mandatory to share funds for setting up 'test beds' for strict security checks here.

However, their Chinese counterparts, Huawei and ZTE, have in principle agreed to fund for setting these test beds, that could cost around Rs 466 crore ($ 100 million).

Test beds are high-tech infrastructure facility having the hardware instrumentation tools simulators and other support software necessary for testing imported telecom equipment related to 3G, 2G, Wimax and others.

"The new rules make it necessary for any importer of telecom gear to go through various security checks, which includes test beds. The funds (for the test beds) for this would be raised by the importers of telecom gear. We have, in principle, agreed to facilitate setting up test beds in India," said a top official with the Chinese equipment supplier.

The new rules make it necessary for foreign equipment companies to adhere to tough new security regulations, including handing over proprietary information source code in escrow accounts used to run networks, regular inspections and large penalties for security breaches.

The western vendors want change in the existing clauses, which penalise for a value of almost up to 100 per cent of the contract value on vendors if any spyware or malware is found in the imported equipment.

"The test beds would be set up by June 2011. Till then the onus of abiding by the security norms for import of telecom gear will solely be on the importer," said a top telecom ministry official.

Major western telecom vendors namely Ericsson, Nokia Siemens Network (NSN), Alcatel Lucent and others have refused to share with the Indian government the mandatory source code of imported equipment.

Shenzen's Huawei and ZTE have taken on global names like Ericsson, NSN and Alcatel Lucent in recent years, winning major contracts in both emerging and developed markets and have gained market share in India with their low- cost products.

These foreign vendors have orders for importing equipment for Indian operators worth over Rs 10,000 crore for setting- up the third- generation (3G) infrastructure in India.

Ericsson has already dropped out of the bidding by state-run Bharat Sanchar Nigam Ltd (BSNL) to buy GSM gear worth around Rs 2,563 crore for supporting 55 lakh subscribers.

It has now written to the Chief Vigilance Commission (CVC) seeking a probe on whether BSNL was diluting the security norms to benefit any other vendor post the submission of technical bids.

In its letter, it also stated that BSNL had the option of continuing with the earlier security norms, but it chose to go with the new rules, which in effect decreased the number of vendors in the race for the bidding.

BSNL's attempts to buy mobile equipment have been repeatedly stalled. Earlier, Nokia Siemens had approached the CVC for an investigation after which the entire tender was scrapped. In June this year, BSNL invited bids to supply equipment for 55 lakh GSM lines, but excluded Chinese companies.

According to a top telecom ministry official, the BSNL bidding would end by December this year following which the two Chinese vendors - both are expected to share the imports for BSNL's requirement of telecom gear - would start exporting equipment to India.

However, the onus for abiding by the new security norms for the import of telecom gear will solely be on the importer till the test beds are set up (likely by June 2011).

Courtesy: Mail Today