labels: Telecom
Call rates to fall as TRAI phases out ADC levy on private telecom operators news
27 March 2008

Mumbai: Local and domestic long distance mobile call tariffs are expected to drop further following a decision by the Telecom Regulatory Authority of India (TRAI) to phase out a levy private telecom operators had to pay state-owned Bharat Sanchar Nigam Ltd (BSNL).

TRAI has decided to phase out the levy from 1 April 2008.

The access deficit charge was levied on private telecom service providers to compensate BSNL for offering rural services, which were considered unprofitable.

The ADC as it exists today has two parts. One, the service providers pay 0.75 per cent of their adjusted gross revenue (AGR) to BSNL while international long distance service providers pay Re1 per minute on international incoming calls to BSNL.  Trai also reduced ADC on international calls to 50 paise from the current Re1.

TRAI, in its ninth amendment to the interconnection usage charges (IUC) regulation, also issued a set of recommendations to the department of telecommunications (DOT) for continuation of support to BSNL's rural wireline network through universal service obligation Fund (USOF).

These steps are expected to address issues like promoting competition, removing market distortions, minimising grey market in international calls and providing comprehensive benefit to all consumers, TRAI said in a release.

The TRAI recommendations include:

  • Operationalising phasing out of ADC from 1 April, 2008;
  • Providing support for BSNL wireline rural network from USOF; and
  • Induction of positive features, including possible reduction in charges for rural mobile subscribers

The ADC regime, first introduced by TRAI with its regulation on the interconnection usage charges (IUC) on 24 January 2003, was superceded by another regulation issued on 29 October 2003. ADC was critical in the early stages of transition smoothly from government monopoly to a liberalised competitive environment. The primary purpose of the ADC regime has been to facilitate the incumbent to transit from monopoly to competitive regime and give adequate time for tariff rebalancing.

BSNL has been pushing for continuation of this levy as it was getting Rs5,000 crore annually as ADC till about two years ago from private service providers for providing services in rural areas.

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Call rates to fall as TRAI phases out ADC levy on private telecom operators