Telecom operators may lower The Hindu Business Line, 28th March 2008 The Telecom Regulatory Authority of India has decided to phase out Access Deficit Charge (ADC) from April 1 onwards. While private telecom operators stand to collectively save around Rs 750 crore next fiscal as a result of the move, the impact at the consumer end is projected to be just a marginal lowering of tariffs.
ADC is a levy imposed by the regulator on the operators to support roll out of telephones in rural areas. Since Bharat Sanchar Nigam Ltd owns 99 per cent of the rural phones, most of the fund collected is passed on to the State-owned company. The ADC as it exists today has two parts. One, the domestic service providers pay 0.75 per cent of their annual revenue to BSNL and second, international long distance service providers pay Re 1 per minute on international incoming calls to BSNL. Reduced rates
TRAI has now decided to phase out the burden on domestic operators from April 1. It has also decided that the component on the international incoming calls would be payable at a reduced rate of Rs 0.50 instead of Re 1 up to September 30. From October there would be no ADC at all. The reduction of charges on incoming long distance calls will have no benefit for consumers. But this will help Indian workers in other countries and NRIs to call their relatives back home at rates lower by 50 paise for every minute of the call. TRAI said that this will also help reduce the grey market calls in the international telephony market due to lower arbitration margins.
The ADC regime was introduced in 2004 and since then BSNL has got nearly Rs 10,000 crore. TRAI had projected a collection of Rs 3,350 crore for 2006-07 alone most of which came from incoming international long distance calls.
In order to compensate BSNL for the loss, TRAI has proposed to give Rs 2,000 crore to the PSU from the Universal Services Obligation fund over a 3 year period. This amount is, however, much lower than what BSNL had demanded for rolling out telephones in rural areas. Senior BSNL officials said that they may contest TRAI’s decision to abolish ADC.
To minimise the impact of removing the subsidy on future rollouts in rural areas, TRAI has also asked private operators to come up with innovative schemes, specifically for rural subscribers, over the next two weeks. Subscriber benefit
Though private operators who were bearing the burden of paying the charges till now stand to collectively save about Rs 750 crore, for individual subscribers this move will translate into a reduction of about 0.75 per cent on their monthly bills.
For example if a mobile user spends Rs 200 a month he will now have to pay Rs 1.50 less. The Cellular Operators Association of India also said that the savings will be passed on to the consumers though it may not result in any significant decrease in tariffs when distributed among 300 million subscribers.
Reacting to the move, private operators including Bharti Airtel, Vodafone Essar and Tata Teleservices said that they will be announcing revised lower tariffs for their subscribers, especially in rural areas. New licence holders such as Datacom, Unitech and Shyam also welcomed the move as they will be spared from paying the charges from day one of their launching services.Industry happy
“We welcome the move. On our part, we are committed to passing on the benefit to our customers in an equitable manner and will announce it shortly,” said a Vodafone Essar spokesperson. “Tata Teleservices welcomes the removal of the access deficit charge. This move is in line with TRAI’s original plan to phase out the ADC by March 31. Keeping with the company’s stated objective of providing the best telecom services at affordable prices, we will be passing on the benefit to our customers wherever applicable,” said a Tata Teleservice spokesperson.
Bharti Airtel said, “As a leader in the telecom sector, we are committed to pass on the benefits of ADC relief to the customers, primarily in the rural areas as desired by TRAI.”
However, BSNL, which stands to lose out almost Rs 3,500 crore as a result of TRAI’s decision, said it was disappointed that its concerns have not been addressed. More
ADC is a levy imposed by the regulator on the operators to support roll out of telephones in rural areas. Since Bharat Sanchar Nigam Ltd owns 99 per cent of the rural phones, most of the fund collected is passed on to the State-owned company. The ADC as it exists today has two parts. One, the domestic service providers pay 0.75 per cent of their annual revenue to BSNL and second, international long distance service providers pay Re 1 per minute on international incoming calls to BSNL. Reduced rates
TRAI has now decided to phase out the burden on domestic operators from April 1. It has also decided that the component on the international incoming calls would be payable at a reduced rate of Rs 0.50 instead of Re 1 up to September 30. From October there would be no ADC at all. The reduction of charges on incoming long distance calls will have no benefit for consumers. But this will help Indian workers in other countries and NRIs to call their relatives back home at rates lower by 50 paise for every minute of the call. TRAI said that this will also help reduce the grey market calls in the international telephony market due to lower arbitration margins.
The ADC regime was introduced in 2004 and since then BSNL has got nearly Rs 10,000 crore. TRAI had projected a collection of Rs 3,350 crore for 2006-07 alone most of which came from incoming international long distance calls.
In order to compensate BSNL for the loss, TRAI has proposed to give Rs 2,000 crore to the PSU from the Universal Services Obligation fund over a 3 year period. This amount is, however, much lower than what BSNL had demanded for rolling out telephones in rural areas. Senior BSNL officials said that they may contest TRAI’s decision to abolish ADC.
To minimise the impact of removing the subsidy on future rollouts in rural areas, TRAI has also asked private operators to come up with innovative schemes, specifically for rural subscribers, over the next two weeks. Subscriber benefit
Though private operators who were bearing the burden of paying the charges till now stand to collectively save about Rs 750 crore, for individual subscribers this move will translate into a reduction of about 0.75 per cent on their monthly bills.
For example if a mobile user spends Rs 200 a month he will now have to pay Rs 1.50 less. The Cellular Operators Association of India also said that the savings will be passed on to the consumers though it may not result in any significant decrease in tariffs when distributed among 300 million subscribers.
Reacting to the move, private operators including Bharti Airtel, Vodafone Essar and Tata Teleservices said that they will be announcing revised lower tariffs for their subscribers, especially in rural areas. New licence holders such as Datacom, Unitech and Shyam also welcomed the move as they will be spared from paying the charges from day one of their launching services.Industry happy
“We welcome the move. On our part, we are committed to passing on the benefit to our customers in an equitable manner and will announce it shortly,” said a Vodafone Essar spokesperson. “Tata Teleservices welcomes the removal of the access deficit charge. This move is in line with TRAI’s original plan to phase out the ADC by March 31. Keeping with the company’s stated objective of providing the best telecom services at affordable prices, we will be passing on the benefit to our customers wherever applicable,” said a Tata Teleservice spokesperson.
Bharti Airtel said, “As a leader in the telecom sector, we are committed to pass on the benefits of ADC relief to the customers, primarily in the rural areas as desired by TRAI.”
However, BSNL, which stands to lose out almost Rs 3,500 crore as a result of TRAI’s decision, said it was disappointed that its concerns have not been addressed. More
Comments