TRAI suggests abolition of ADC by April 1

By SiliconIndia   |   Wednesday, 23 January 2008, 13:15 Hrs
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Mumbai: A release from the Telecom Regulatory Authority of India (TRAI) has suggested elimination of the existing practice of levying Access Deficit Charges (ADC) on private operators from April 1. The proposed move could hit the revenues of state owned telecom company Bharat Sanchar Nigam (BSNL) especially at a time when the company is looking at an IPO.

According to TRAI this move could make telecom services more affordable.

ADC is a levy paid by private operators to BSNL, which the company uses for offering services in rural and non-profitable sectors. The total ADC provided to BSNL stands at around Rs 31,500 crore.

Initiating the consultation process, TRAI has called for comments from the industry on ADC abolition. It has also suggested that the government could look at supporting BSNL from the Universal Services Obligation (USO) fund as an alternative.

"The idea of instituting ADC was not to make the incumbent perpetually dependent on support, but to allow it time for adjustment during the period of transition from a monopolistic environment and era of government funding and cross-subsidization to a competitive business environment," said the release.

The total ADC funding for 2007-08 is expected to be around Rs 12,500 crore, added the release.

ADC was introduced as a time-bound measure and later it was decided to abolish it in 2008-09. According to TRAI from 2008-2009 ADC should be replaced or merged with Universal Service Obligation (USO) regime, which came into effect on May 1, 2003.

"It was essential to deliberate on these issues as support to rural services and making them affordable for the rural masses was of vital importance," added TRAI.

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