Dear Prakash,
This is a good discovery. I recommend you to report this to the CPE vendor, ZTE and the service provider, BSNL. Of course, they don't have vulnerability reporting channel with them, at least we can report it through tech support or to senior officials in BSNL. You can also report it to CERT India, which is now being strengthened with more power and responsibility. You need to provide sufficient proof of exploitation for them to act.
To over come such vulnerabilities or other weak implementations (in earlier Huawei and other modems), you can configure your computer to directly dial-in using PPPoE (if you have a single computer) or use another router like Linksys, Netgear or Dlink (which seem to have better and secure implementation) and configure PPPoE dial in through the modem. This effectively turns the BSNL router/modem into a dumb device, working just as a modem. This method does not fix the actual vulnerabilities but reduces the attack surface.
Unfortunately, I don't have a ZTE modem to test this vulnerability.
Below are some contact you can use:
Regards,
Niranjan Patil, CISSP, CCNA
Information Security Consultant
http://outscribe.orghttp://www.linkedin.com/in/niranjanpatil