ADC to be phased out, USO fund to be used instead

New Delhi, Jan 31 (UNI) The Telecom Regulatory Authority of India (TRAI) today said the Access Deficit Charge (ADC), the amount paid by private players to state-owned Bharat Sanchar Nigam Limited (BSNL), will be phased out ushering in cheaper domestic and long distance tariffs for the consumers.

TRAI said reduction in rates of ADC after due consultation would pave the path for lower telecom tariffs and sustained growth.

The reduction of ADC on international calls would reduce arbitrage, hence there will be less incentive for ILD grey market.

''There would also be greater flexibility to service providers,'' TRAI said adding that as per the established framework, ADC will be phased out in 2008-09 and any fixed wire-line with below cost operation especially in rural areas with regulated tariffs any justification for access deficit needs to be covered through Universal Service Obligation (USO) fund.

But the move will draw flak from BSNL as it is a levy paid by all telecom operators to BSNL and this allows the PSU to subsidise its rural operations and fulfill its social obligations.

Currently all operators pay 1.5 per cent of their annual aggregate gross revenues (AGR) to BSNL as ADC. BSNL also earns an ADC of Rs 1.60 per minute for all incoming international calls to India and Re 0.80 per minute for every outgoing ISD call.

TRAI had last year fixed the ADC at Rs 3,335 crore for 2006-07, from Rs 5,340 crore the previous year. This has enabled all operators, including BSNL, to reduce long-distance tariffs and implement OneIndia call rates that is STD at Re 1.

The regulator had also done away with the per minute ADC for domestic calls.

If BSNL needs subsidy from April 2008, it will have to turn to the universal service obligation fund. ''The ADC regime cannot continue in perpetuity.'' More UNI