ADC cut by Rs 2,000cr, long distance call rates to go down

New Delhi, Mar 21 (UNI) The Telecom Regulatory Authority of India (TRAI) today slashed Access Deficit Charges (ADC) to Rs 2,000 crore from Rs 3,200 crore, a move that would make domestic and international calls cheaper.

TRAI reduced per minute ADC on Outgoing International Long Distance Calls to zero from existing level of Rs 0.80 per minute which is a complete removal of per minute ADC burden on domestic consumers in outgoing international long distance calls.

Also, per minute ADC on Incoming International Long Distance Calls has been reduced to Re 1 per minute from existing Rs 1.60 per minute which is a reduction of around 38 per cent.

The telecom regulator also cut ADC on percentage revenue share to 0.75 per cent from existing 1.50 per cent of Adjusted Gross Revenue (AGR) of all service providers ie Access Providers, National Long Distance Operators and International Long Distance Operators. This amounts to a reduction of 50 per cent of ADC on percentage revenue share basis, TRAI said in a statement.

The amended regulations shall be effective from April 1, 2007 till March 31, 2008.

All this would translate into a major relief to the domestic telecom sector by reduction of ADC on percentage revenue share and removal of per minute ADC on international outgoing calls.

There will be no ADC charge on revenue of access providers generated from rural wireline subscribers.

The authority said it expects that the reduction in ADC amount resulting from the Telecommunication Interconnection Usage Charges (Eighth Amendment) Regulations, 2007, would be fully passed on to the consumers by the service providers and would pave the path for lower telecom tariffs, greater usage of services as a result of affordable/ lower tariffs and sustained growth of telecom services.

This cut would also result in greater flexibility to service providers for reducing the tariff, reduction in arbitrage in international incoming calls thus reducing grey market in ILD services and help bringing in a level playing field between outgoing international calls made through internet telephony and switched traffic minutes and hence boost growth of traffic minutes through switched telephony that would increase revenue of service providers.

TRAI has been reviewing the ADC regime on an annual basis.

As part of the annual review, the authority issued a Consultation Paper on ''Access Deficit Charge (ADC)'' on 31st January, 2007.

After following the transparent consultation process including the Open House Discussion at New Delhi on 6th March, 2007, TRAI today notified amended regulations and decided to lower ADCs in line with the determination made in 23rd February, 2006 Regulation.

TRAI mainly relied on higher growth in the incoming international calls which is estimated to contribute Rs 1,400 crore.

The ADC regime was put in place within the context of the evolving situation in the telecom market particularly the exponential growth trend and the sustainability of the fixed line operations in a competitive environment.

The ADC, which in the very nature is for alimited period, is mainly to give time to incumbent operators for rebalancing the tariff during a transisition period.

UNI