Illegal optical fiber cable connections in Bengaluru cause revenue loss for BBMP

Bengaluru’s optical fiber cable (OFC) network is plagued by irregularities, with a few telecom service providers allegedly colluding with Bruhat Bengaluru Mahanagara Palike (BBMP) officials to make numerous illegal connections. These unauthorised installations have led to revenue losses for the BBMP, estimated to run into crores of rupees.

An audit has revealed that the cables have been laid without proper permissions and without paying the required fees, often tied haphazardly to trees, electricity poles, buildings, and traffic signal poles. This not only causes damage to the city’s infrastructure but also poses risks to the safety of pedestrians and vehicles.

An official said, “Despite the existence of a tender system for the legal installation of OFC cables, the BBMP has failed to take decisive action against these illegal connections. The situation suggests the presence of a nexus operating within the city, laying cables unlawfully and undermining the BBMP’s financial stability.” The official said that the prolonged inaction has raised major concerns among citizens, who are now demanding stringent measures to address the illegal connections and hold those responsible accountable.

“A recent audit has brought to light further alarming details about the financial irregularities. It revealed that telecom companies in Bengaluru have significantly underpaid the BBMP, resulting in a revenue loss of Rs 86.65 crore. The audit found that some companies had obtained permission for limited cable lengths but laid up to 10 times the authorised lengths. This blatant disregard for regulations has exacerbated the financial losses incurred by the BBMP,” the official said.

GST evasion
Moreover, the audit uncovered that a few telecom companies have been evading Goods and Services Tax (GST) by not generating invoices on the GST portal, causing additional revenue shortfalls for the government. The Karnataka government had introduced a reverse charge mechanism in 2018 to ensure that telecom companies paid the GST.

Under this mechanism, the telecom companies were responsible for paying the tax on behalf of the service providers. However, the audit revealed that this mechanism was not effectively implemented, resulting in substantial unpaid taxes.

Further compounding the issue, Rs 49.94 crore collected as a security deposit from telecom companies was not deposited into the government treasury as mandated by the Karnataka.

Treasury Code, 1958, Section 278. “This amount should have been securely deposited, but the failure to do so has drawn the government’s objection and demands for rectification.

Additionally, Rs 7.98 crore was not collected from 3,448 towers due to the non-implementation of the reverse charge mechanism. These amounts were supposed to be collected by the BBMP, but the lapses in enforcement have led to significant financial oversights,” claimed an official. In light of these findings, the State Government has now initiated steps to recover the evaded GST and other dues from the telecom companies. The audit’s revelations have forced the authorities to take action against those responsible for these financial irregularities.

The government’s response aims to enforce stricter compliance with regulations and ensure that such revenue losses do not recur in the future.

“The BBMP and the government are now focused on rectifying these issues and holding the telecom companies accountable for their actions. Measures include enhancing the oversight and enforcement mechanisms to prevent illegal cable installations and ensuring that all fees and taxes are duly collected. These steps are crucial to safeguarding public revenue and maintaining the integrity of the city’s infrastructure,” said an official.

Gaurav Dinesh, a citizen said, Bengalureans are tired of seeing wires everywhere and despite complaints, there has been no respite. “As the situation unfolds, the residents of Bengaluru remain vigilant, hoping for swift and effective action to address the irregularities in the OFC network.

The audit has underscored the need for transparency, accountability, and robust regulatory frameworks to prevent such financial discrepancies and protect the interests of the public.” Bangalore Mirror