Thomas K. Thomas

New Delhi, Sept. 19

THE telecom industry is split midway over the issues of whether access deficit charge (ADC) is a matter of policy or a regulation.

While the Cellular Operators Association of India (COAI) has come out in support of the Government's stance that ADC should be made a policy issue, the rival CDMA camp is backing the telecom regulator in rejecting Government intervention.

The COAI, in a letter to the Department of Telecom (DoT), has said: "Access deficit charges like the USO levy are an instrument of Government policy, which is used to ensure affordability and accessibility of telecom services for all citizens. Although the ADC charges are bundled along with the IUC charges, ADC has nothing to do with interconnection. This is only a recovery mechanism that is being used to collect the ADC. Thus, the TRAI's powers on ADC are only recommendatory and not absolute."

The rival CDMA camp said that the Government itself had asked the TRAI in 2003 to suggest ways to fund the subsidy for rolling out rural services and therefore, it was right that the regulator continue to be the authority.

"The telecom regulator is seized of the concerns of the operators and has done enough work already. It wouldn't be right to change the rules of the game halfway," said a CDMA operator.

The TRAI had earlier sent a note to the DoT rejecting moves by the Government to issue a directive whereby ADC could be made a policy issue.

The TRAI said that Government intervention was not necessary since the regulator was looking at all the concerns raised by the DoT and was equipped to take a decision on its own.

The DoT had sent a letter to the TRAI asking it to consult the Government on the issue. ADC is a levy imposed on operators to fund rural telephony.

GSM-based cellular operators said that the TRAI can make suitable recommendations to the Government on an ADC regime, based on which the Government would take the final decision and issue the necessary guidelines.

After this, the role of the TRAI would be to ensure compliance with Government guidelines.

CDMA operators, on the other hand, supported the TRAI move to reduce the quantum of the ADC collected from Rs 5,000 crore currently. They said that if the issue becomes a policy, then the Government may not reduce the kitty in order to protect the revenues of BSNL. Most part of the ADC fund goes to BSNL.

(This article was published in the Business Line print edition dated September 20, 2005)
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