TRAI scraps ADC to benefit mobile consumers

NI Wire

New Delhi

Fri, 28 Mar 2008: 

Mobile users can now expect to spend lower amount on domestic as well as international calls as telecom regulator has announced on Thursday that Access Deficit Charge (ADC) will be done away from April. Coincidently the proposal is to implement from April 1, which is marked as the Fool’s Day, readers must not ke this offer as fool’s joke.

TRAI has recommended a complete phase out of the five-year-old ADC from April 1 this year. ADC was a charge, levied as a percentage of a private mobile operator’s revenues, on all outgoing calls made to the BSNL network. This was to compensate BSNL for providing subsidised tariffs to subscribers in rural areas. After the successive reductions at different intervals, the ADC now stands at 0.75 per cent of the adjusted gross revenues for telecom operators.

While ADC on domestic calls will be eliminated completely from April, the eradication on the international calls will be implemented in two phases. The first elimination will be effective simultaneously with domestic calls from April 1, under which the incoming international calls will be cheaper as TRAI has halved their ADC to 50-paise per minute. The ADC on incoming international calls will be completely removed from September 30.

From April telecom operators may be left with savings amounting to about 0.75 per cent of their adjusted gross revenues. The levy’s phase out will enable the industry to save about Rs 700 crore annually.

Savings owing to elimination of ADC charges may enable operators to lower mobile tariffs, which could aid usage. Mobile to landline tariffs may be the key beneficiary of this change. On the other hand, retention of these savings could help to some extent in stemming declining ARPUs.

The quarters of private operators have welcome the move as they think it would help them to reduce call charges which will eventually benefit the consumers.

The TRAI has also recommended that the government give it a subsidy of Rs 2,000 crore per annum for the next three years from the Universal Obligation Fund (USOF). In order to improve communication facilities in rural areas, all telecos pay 5 percent of total revenues towards the USOF.

BSNL warned that the non-availability of fund in form of ADC charges would be forced to discontinue all its rural fixed-line operations, if the levy keeps in operation. The allocation of central funds may allow BSNL to continue to offer subsidised tariffs in rural areas.

India, the second largest mobile users

Regular enhancement of mobile users in India has set it to become the world's second largest wireless network market after China by April 2008. India has crossed the 250-million mobile subscribers with the addition of 8.53 million new mobile users in February, according to telecom regulator TRAI.

As per the latest report, number of people availing mobile facility monthly is the highest in the world. Where as 8-9 million people subscribes mobile per month in India, China has recorded only 6-7 million and only 2-3 million subscribers adding in United States.

India's wireless subscriber base will surpass that of the US during the first half of April this year and become the second-largest wireless network in the world.