Ericsson racks up pressure on BSNL

India's BSNL has encountered more turbulence in its long-delayed GSM expansion plans, with Ericsson asking the government to probe its $450 million (€322 million) network tender.
 
The Swedish vendor has asked state corruption regulator the Central Vigilance Commission (CVC) to investigate contract stipulations requiring vendors to place their source codes and equipment designs in escrow for access by intelligence agencies, the Economic Times said.
 
Ericsson, which withdrew from the process in October because it refused to share the codes, has told CVC that government guidelines prevent any rule change partway through a tender.
 
Rival Nokia Siemens Networks (NSN) has reportedly asked BSNL to relax the rules for the tender, BSNL’s latest attempt to buy new network equipment.
 
The telecom ministry introduced security regulations requiring vendors to share their source codes in July, but the prime minister’s office subsequently ordered an inquiry into the guidelines after an outcry from foreign equipment suppliers.
 
In the interim, operators were left free to choose to follow either the escrow guidelines or the earlier regime requiring self-certification of telecom gear. BSNL chose to include the escrow terms in the GSM tender.
 
State-owned BSNL has tried repeatedly to expand its GSM network since early 2008. It was forced to cancel its $10 billion, 93-million line, tender in March on the recommendation of the CVC.
 
It short listed three western vendors – Ericsson, NSN and Alcatel-Lucent – in a second tender in July, but then cancelled the deal in September when the new rules allowed Chinese firms to bid.

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