The Hindu Business Line : Telecom operators welcome access deficit charge phase-out

New Delhi, Feb. 14 Telecom operators have welcomed the phasing out of access deficit charge in their views to the Telecom Regulatory Authority of India’s consultation paper on the matter, with the predictable exception of the beneficiary of this charge, BSNL.

Stakeholders, including Reliance, Bharti, Tata Teleservices, VSNL and MTNL amongst others, in their comments to the Consultation Paper dated January 21, welcomed the phasing out of ADC.

COAI view

Cellular Operators Association of India has argued that reduction in ADC tariffs would benefit consumers.

“For example, in the last amendment of ADC regime, the Authority had abolished the ADC of 80 paise per minute on international long distance (ILD) outgoing calls and also reduced ADC on annual gross revenues (AGR) from 1.5 per cent to 0.75 per cent.

“Though nexus between reduction of ADC on AGR and the tariff plans cannot be established in general, the benefits of reduction of per minute ADC on ILD outgoing calls has been passed on to the subscribers as reflected in the tariff plans submitted by the service providers to TRAI.”

Reliance was of the view that, “Though ADC is given to the BSNL to rebalance its tariffs, it is using this subsidy for anti-competitive measures like charging rentals at rock bottom rates that are predatory in nature and scuttle competition.”

Bharti, in its comments, said the decision was in line with the policy envisaged while bringing ADC regime; and pointed out that TRAI had itself admitted that the ADC regime could not be allowed to run to perpetuity otherwise tariff rebalancing would never take place. BSNL argued that ADC was an integral part of cost-based interconnection usage charge (IUC) regime as prescribed in the IUC regulations at the time of introduction of this concept and that ADC could not be abolished.

On whether there was a case for providing support to BSNL from universal service obligation fund for their fixed wireline operations in rural areas, Reliance said no.

“BSNL’s financial statements for 2006-07 do not suggest in any manner that it is making any losses on account of access deficit. BSNL is immensely cash rich and as per its audited balance sheet it was maintaining Rs 37,542 crore as cash and bank balance as on March 31, 2007. Such a large amount of money lying in banks is more than the networth of number of private telecom companies which are made to pay ADC to BSNL,” it pointed out.

neutral approach

Bharti called for a technology neutral approach to be adopted.

“Due to its distinctive benefits, the mobile services are now very affordable and are also very easily accessible. Infrastructure has demonstrated itself to be the most conducive medium to rapidly deliver the benefits of connectivity to the rural areas.”

BSNL argued that it needed Rs 8,774 crore per annum for sustaining operation of its basic telephony in rural areas. And reiterated that support should continue in the form of ADC.

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