TRAI to phase out ADC by 2009

By agencies   |   Wednesday, 21 September 2005, 07:00 Hrs
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NEW DELHI: In a move that is expected to bring cheers to private operators, the Telecom Regulatory Authority of India said it would phase out Access Deficit Charge (ADC) by 2009 and merge with the Universal Service Obligation (USO) fund.

TRAI said the ADC has been withdrawn in most countries a few years after its introduction as it was inefficient and anti-competitive. ADC is a levy imposed on private telecom operators to fund state-owned Bharat Sanchar Nigam Limited's (BSNL) 'non-lucrative' rural operations.

"It is a depleting regime and would get merged with the USO and thereby any loss which is mainly in the rural areas will be borne by the fund," TRAI said adding the loss is less for urban lines and after one or two years, it would become zero.

TRAI said the move was necessary, as private operators cannot wait for the BSNL to undertake a rebalancing exercise and to subsidize the PSU. "This would inhibit growth, competition and level playing field in the sector," TRAI said.

By 2006-07, which is the first phase, the TRAI will replace the levying of the charges on all long distance and international calls by a revenue-share scheme.

In the second revision in 2007-08 the TRAI will make ADC less than 4.1 percent of the revenues.

The issue of ADC has for long been a critical factor in the smooth functioning of the telecom sector in the country and had split industry with the GSM operators backing the government and said ADC should be a policy issue while the CDMA operators has backed the telecom regulator and asked that ADC should be done away with and stop the government from interfering.

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