Phone rates to tumble

Trai cuts access deficit charge.

Long distance telephone tariffs are set to fall from February 1 with the Telecom Regulatory Authority of India (Trai) today announcing a cut in the access deficit charge (ADC).

As per the new rates, the ADC on inter-circle calls has been slashed by 62.5 per cent to 30 paise for domestic long-distance calls beyond 200 km. The ADC for inter-circle calls for distances between 50 km and 200 km has been reduced by 40 per cent to 30 paise from 50 paise.

For international long distance calls, the charges have been reduced by 41.18 per cent on outgoing calls and 23.53 per cent on incoming calls. From the existing flat rate of Rs 4.25, the new deficit charges are Rs 2.50 for outgoing and Rs 3.25 for incoming.

There has been no change in the ADC for local and inter-circle calls between two points which are up to 50 km apart. The levy is passed on to fund Bharat Sanchar Nigam Ltd's (BSNL's) rural expansion plans.

Trai Chairman Pradip Baijal said the reduction would not affect BSNL's operations and the simplified regime would help increase telecom penetration and density.

"The total ADC amount earned by BSNL will remain unchanged at Rs 5,000 crore. As there has been an exceptionally large increase in call minutes, Trai has been able to decrease the per minute ADC and ensure that the total amount collected remains the same," Baijal said.

BSNL Chairman AK Sinha said though BSNL had opposed the move, it was satisfied with the methodology adopted by the regulator.

"We are yet to see the full order. We understand the cut has been made on the assumption that with the increased volume, the results will be the same. However, it remains to be seen if it will have an impact on us," said Sinha.

The move was, however, welcomed by private cellular operators with Bharti and Idea saying that the benefits of the reduction would be passed on to the consumers from February 1.

The extent of tariff cut was being worked out by the operators and announcements are expected in the coming days.

"There has been a significant reduction in outgoing international calls. The benefits of the ADC cut will be passed on 100 per cent to the customers," Bharti Chairman Sunil Mittal told reporters.

"The impact will be more in case of calls made for distances over 200 km and international calls. We plan to reduce tariffs accordingly," Idea chief executive Vikaram J Mehmi said.

When contacted, Reliance executives said the situation had to be studied before it could comment on the price cuts.

As per the new Trai guidelines, fixed line operators, other than BSNL, would retain the ADC only on their outgoing calls, while BSNL alone would be entitled to receive the charges on all incoming international calls.

The regulator proposes to examine the execution of the new rates after three-six months of the implementation of the regime, without any further consultations.