The Hindu Business Line : Phone tariffs may fall as TRAI moots cut in ADC

TELECOM tariffs are likely to fall by 16-25 per cent with the Telecom Regulatory Authority of India (TRAI) proposing to bring down the Access Deficit Charge (ADC) to between 2.2 per cent and 5.3 per cent of the revenue, instead of the present system of loading the charge on each call made by consumers.

The proposed ADC regime would lower the burden on operators from Rs 5,000 crore per annum to about Rs 1,500-3,500 crore. The benefit is expected to be passed on to the consumer.

The proposal, which is expected to be implemented by October, was issued by TRAI on Wednesday in a consultation paper and is in line with the regulator's plan to gradually phase out ADC.

Access Deficit Charge is essentially a form of a cess imposed by TRAI on all telecom users for providing subsidised telephone services in rural areas by Bharat Sanchar Nigam Ltd (BSNL).

At present, each time a consumer makes a domestic call, he pays an ADC varying from 30 paise to 80 paise per minute and a high of Rs 4.25 per minute for international long distance (ILD) calls.

The ADC component accounting for about 16-25 per cent of the tariff is being passed on to BSNL.

If the TRAI proposal comes through, a major impact will be on international long distance tariffs which may be cheaper by Rs 4.25 a minute. Domestic tariffs may come down by 30 paise to 80 paise.

Operators said that even if TRAI imposes the ADC as an addition to the 10 per cent revenue share being paid annually on an average, the tariffs are likely to come down by at least 15 per cent.

The second impact of the move would be that the grey market in ILD calls would be wiped out since legal call charges may come down to as low as Rs 5 a minute.

Private operators said that the move would also stop anti-competitive practices.

Mr T.V. Ramachandran, Director General, Cellular Operators Association of India (COAI), said: "While it is difficult to ascertain the exact impact on tariffs, the move would improve the competitive levels in the telecom sector since the ADC would be disbursed from a Central fund and not directly passed on to BSNL."

Giving the rationale for a review in the ADC regime, the telecom regulator said, "The variation in the ADC amount creates an incentive to misreport the category of calls, for example, for roaming and long distance calls.

Further, the bypass issues tend to also give rise to grey traffic, an issue which has again been raised by certain operators with the Authority."

TRAI has asked stakeholders to respond to the consultation paper by July 15.

TRAI has said the ADC amount could be brought down in light of the compensation package given to BSNL in terms of licence fee reimbursement, decreasing cost of providing services and increasing subscriber base which had reduced the subsidy amount.

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Phone tariffs may fall as TRAI moots cut in ADC