Telecom tariffs are set to fall significantly with the telecom regulator -- Telecom Regulatory Authority of India -- announcing a cut of more than 37 per cent in the levy paid by private players to Bharat Sanchar Nigam Ltd for providing services in rural areas.
"The total amount of levy (access deficit charge) for the financial year 2007-08 has been reduced to approximately Rs 2,000 crore (Rs 20 billion) from the existing level of Rs 3,200 crore (Rs 32 billion)," TRAI said on Wednesday.
ADC is the amount payable by the service provider at the caller's end to the service provider at the receiving end for accessing services rendered by the latter in domestic long distance telephony.
In particular, international long distance calls are likely to become cheaper as the levy on such calls has been completely removed from 80 paise being charged now.
All private operators pay ADC to state-owned BSNL for carrying out social obligations like providing services in unremunerative and rural areas.
"The authority expects that the reduction is ADC amount resulting from Wednesday's order would be fully passed on to the consumers by the service providers," Trai said.
The new regime would come into effect from April 1 this year.
TRAI also reduced the levy on incoming ILD calls by 38 per cent to Re 1 from the existing Rs 1.60 per minute. The ADC on percentage revenue share basis of the telecom operators has been reduced by 50 per cent.
"Telecom operators would now have to pay 0.75 per cent of their adjusted gross revenues towards ADC from existing 1.50 per cent," TRAI said.
The levy would be charged on revenue of access providers generated from rural subscribers.
TRAI said ADC is a depleting regime and should be merged with Universal Service Obligation fund, if considered necessary by the Department of Telecom.
ADC, which is for a limited period, is mainly to give time to telecom operators for rebalancing the tariff during a transition period.
"The reduction in ADC would give greater flexibility to service providers for reducing the tariff and offer innovative tariff packages to consumers," it said.
The reduction in arbitrage in international incoming calls would give less incentive for ILD grey market, it added.
COAI disappointed over TRAI's ADC cut
Private cellular operators expressed disappointment over telecom regulator TRAI's decision to cut the levy paid to state-run BSNL for its rural services, saying the reduction was lower than expected.
"We are disappointed. We had expected the total ADC (Access Deficit Charge) to come down to Rs 1,600 crore (Rs 16 billion). . . the burden is 25 per cent higher for the current fiscal," T V Ramachandran, director general of Cellular Operators Association of India, told PTI.
Ramachandran said COAI, the industry body of GSM players, had anticipated more benefits for domestic customers, which has not happened.
"It is a burden higher than expected," he said, adding the association had pleaded for sparing domestic ILD customers from the levy.