Trai cuts ADC; tariffs may fall

Telecom tariffs are likely to fall as Trai today substantially lowered access deficit charge (ADC) - a levy paid by private operators to BSNL for rural operations.

In a new regime, Trai has done away with the distance slab within the country, and has imposed a fixed rate of only 30 paise ADC for all types of calls across the nation.

Importantly, Trai has lowered ADC on incoming international calls to Rs 3.25 per minute from the existing Rs 4.25, and to Rs 2.50 per minute on outgoing ISD calls from Rs 4.25.

The new regime would come into effect from February 1, 2005, Trai said, adding it would review the rates within three-six months of implementation on the basis of examination of new data.

The regulator claimed that the total ADC amount going to BSNL would remain unchanged at Rs 5,000 crore.

"Due to the exceptionally large increase in minutes that fund ADC, the per minute ADC has been decreased while keeping the total amount unchanged," Trai said in a statement, adding that the new ADC regime would result in lower prices for domestic consumers.

The regulator has not acceded to the demand of private operators that ADC be collected on the basis of revenue of the operators and not on the basis of calls.

"Several stakeholders, including BSNL, have opposed implementation of the revenue-share ADC regime on the grounds that it will increase rentals and local call charges," Trai said, adding that "change over to the revenue-share regime and its merger with universal service obligation (USO) is indeed the final solution for taking care of all anomalies and issues associated with ADC."

Sunil Mittal, chairman of Bharti Tele-Ventures, today announced that the entire benefit of the ADC cut will be passed on to customers.

"It's a good start, but there is a still long way to go," Mittal said.