Behind the 13 consecutive fines: When will the operators’ “low-price bidding” stop?

According to people familiar with the matter, a certain operator recently punished 13 optical communication equipment suppliers. In addition to confiscating part of the deposit and deducting the next ODN product procurement score, it also canceled the remaining shares that had been allocated but not executed.

The operator gave the reason for the punishment as the substandard quality of the ODN devices provided by these companies. In fact, these companies are all frequent winners of the bid, but this time almost all of them were not spared. What is the reason behind the "collective collapse" of suppliers?

Some people may believe that equipment vendors sell inferior products as good ones in order to maximize their own interests and seek more profits; but industry insiders familiar with telecommunications bidding know that this is actually a "helpless move" and a "lose-lose" outcome for equipment vendors and operators.

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The trouble caused by low-price bidding

Back to the punishment itself, the manufacturer has an unshirkable responsibility for product quality problems. However, the fundamental reason for this situation is the low-price winning bid, and it is the operators who promote this chaos.

In many bidding projects of operators, price is not the only factor, but it is also a decisive factor. If equipment manufacturers want to be shortlisted, they must do a good job in commercial bidding, and it is not uncommon to see prices below cost.

Unlike the main system equipment, ODN products are difficult to generate maintenance and expansion income. There is almost no "enclosing land before collecting grain" situation. If you want to make money after entering the shortlist at a low price, you can only cut corners. If the operator turns a blind eye, it will be fine. If you get serious, the embarrassing scene at the beginning of the article will appear. The operator encourages low-price bids, resulting in bad money driving out good money, and the government punishes the bidding companies.

As the purchaser, the operator should be fully aware of the market price of such equipment and can set a price that cannot be lower than the cost price. When facing the quotations of these manufacturers, there should be a basic judgment of which are normal quotations and which are too low. Operators can let those companies with reasonable prices and good product quality win the bid instead of sorting them by price.

Winning a bid at a low price is harmful to others and not beneficial to oneself

For these 13 manufacturers, this problem will definitely have a negative impact on their brand image. The existence of these inferior and fake products in the existing network also poses a great security risk to the broadband network.

For the operators themselves, this is like shooting themselves in the foot. First, although using these defective products can save a lot of CAPEX (capital expenditure), once such ODN products have problems, the maintenance cost is very high, which increases their OPEX (operating expenditure), which is undoubtedly not worth the loss. At the same time, inferior products are bound to affect the quality of mobile broadband networks, and thus affect user experience.

In addition, it is undoubtedly a nightmare for operators' operation and maintenance personnel. Product quality problems mean that the network will frequently have problems, and these ODN products are basically passive products, and maintenance requires on-site processing, which is time-consuming and laborious. Therefore, a series of problems caused by low-price bidding are more disadvantageous than beneficial to both manufacturers and operators, and even more difficult for operation and maintenance personnel.

Bidding policies need to be standardized

How to curb the phenomenon of low-price bidding has become an urgent problem to be solved. Earlier, Lin Zhong, a professor at Beijing University of Posts and Telecommunications, said that this model of winning the bid at the highest price urgently needs to be changed.

He proposed that quality and service should be important references in the centralized procurement process. Operators should increase inspection efforts for products that are lower than the manufacturing cost or even lower than the material cost, and at the same time formulate legal charters and management systems to restrict these companies.

In general, to completely change the chaos of centralized procurement, simply warning these manufacturers through punishment cannot completely solve this problem, and manufacturers will still bid at low prices. Operators should first change their own procurement model of winning bids at low prices, and further standardize bidding policies through joint efforts of industry associations and market supervision.