I think you have been totally misguided/misinformed.
Apply online on this link
MTNL Delhi, Customer Care Portal
by providing the details. You will clearly find an option under modem type "Broadband
ADSL SUBS Modem" meaning subscriber provides the modem.
Also there are no charges for any installation or testing etc check this
Broadband where they have extended the promotional offer for freedom plans
i got this plan last month on an existing number and you wont believe that it was functional within 2 hours! because i had my own modem
router. only thing i got done was got it rewired so that there is one wire from pole to router. Also they have my plan functional from 9th nov and there billing cycle is from 1st to 30th so my bill for last month was less than 700 after all taxes since they adjusted on pro rata basis. Also got 100 calls free for the landline.
only mistake mtnl did was that they initially billed me rupees 300 as activation and testing charges which i got rectified after showing the advertisement to the accounts officer.
i am greatly pleased with mtnl in my area as speeds are as promised during the day (infact around 550kbps). only issue is that during nights they do not deliver full 2mbps. it is around 1.8. but then whenever i have restarted my router around 8-830pm at night i get the speed switch over( technically the plan states it to happen after 11pm at night)and best part is no FUP like airtel(i switched over from them)
i can't expect more from any isp for 800 plus taxes (total less than 900).greatly pleased with mtnl in south delhi (hauz khas)
I told the call center lady that I dont need modem but she said I need to speak to the guy who comes for installation for this modem thing; so what could I have done

I thought she might be telling it right