New Delhi, March 6: The ministry of defence is likely to seek the Union cabinet's approval soon for a Rs 2,000-crore order to procure mobile telecom systems from Lucent Technology based on the code division multiple access (CDMA) technology.
Lucent is the only company that will supply these systems and is scheduled to get a Rs 50-crore order in the first phase. It has a tie-up with Bharat Electronics Ltd, a Bangalore-based public sector unit that supplies electronic equipment to the defence.
However, senior members of the technical procurement committee (TPC) have opposed the move. The decision has fuelled a controversy within the defence establishment over the wisdom of opting for the CDMA technology and stirred criticism over Lucent's past performance in India.
Interestingly, the negotiations for the CDMA equipment had begun in 2001 when George Fernandes was the defence minister. No decision had been taken then since the technology and regulatory issues had snowballed into a major controversy.
The CDMA telecom systems are supplied by Chinese companies ZTE and Huawei, and US firms like Nortel, Motorola, and Swedish major Ericsson.
Lucent has had a chequered record with respect to the orders it executed for the Indian telecom operators and manufacturers. Also, concerns have been raised over the vulnerability of the CDMA technology to interference, says a senior technical expert with the Telecom Engineering Centre.
Lucent had first tied up with ITI to establish a foothold in India but it broke up in 2002 after the installation of more than 30 lakh lines both for private operators as well as BSNL and MTNL.
Sources in the department of telecom (DoT) said, 'This has forced ITI, which has been surviving on doles from the government, to fend for itself. It finally joined hands with Alcatel, acccepting the latter's conditions on intellectual property rights on products.'
Lucent has supplied telecom equipment based on both technologies prevalent in India ' global system for mobile communications (GSM) and CDMA.
A few years after the company had helped telephony majors install their GSM networks, it informed customers that it had exited from the GSM technology worldwide and would, therefore, not be able to offer upgradation.
Problems for operators using CDMA was compounded by the fact that Lucent's equipment did not match the latest requirements. They were also not upgradeable.
After breaking off ties with ITI, sources said Lucent had left BSNL, MTNL as well as other private operators in the lurch as it refused to upgrade their telecom networks.
A senior DoT official said: 'MTNL could not cash in on the opportunity even though it had started its service early because of the vendor's inability to help upgrade the equipment.'
Lucent has always managed to secure orders even though it has been mired in controversy. When MTNL bought the equipment from Lucent in 1998-99, there was an outcry over the bidding process. There were allegations that the terms and conditions were designed to disqualify all other operators except Lucent.
However, BSNL went ahead in 2001 and ordered equipment from Lucent. It now faces the consequences of either dismantling the systems or offering only a voice service.
Despite repeated attempts, Lucent president C. S. Rao could not be reached for his comments on the latest controversy.
Many operators have already junked their networks. Tata Teleservices Ltd is estimated to have scrapped equipment worth Rs 250 crore since it has not been able to provide value-added services to its customers using the existing system. (See Chart)
A senior official, who claims to have opposed the latest defence ministry move to award an order to Lucent, says 'We feel that the government should look into the background and track record of the vendor and the technology it is offering before issuing orders. Further, it is not clear who holds the code for these CDMA systems.'
The defence ministry order is considered sensitive and the government should know who has the code for the systems before it issues the order since there are security-related issues involved.
An expert on telecom technologies in India said, 'The CDMA equipment synchronises with GPS while GSM synchronises with its network.' What this means is that calls from CDMA subscribers are transmitted using satellites (which make them vulnerable to external monitoring). In the GSM network, the subscribers' calls routed over the airwaves and transmitted within the network, making them less vulnerable.