TRAI lowers ADC - call rates to be slashed soon

TRAI has done away with the distance slab within the country and has
imposed a fixed rate of only 30 paise ADC for all types of calls across the
nation

In its bid to lower call rates in India, Telecom Regulatory Authority of
India (TRAI) has lowered the access deficit charges (ADC) on local and
international calls. In this new regime, TRAI has removed the distance slab
within the country and has imposed a fixed rate of only 30 paise ADC for all
types of calls across the nation.

ADC is a levy paid by private telecom operators to state-owned Bharat Sanchar
Nigam Ltd (BSNL) for rural operations. According to the new ADC regime, TRAI has
directed a lowering of ADC on incoming international calls to Rs 3.25 per minute
from existing Rs 4.25 while to Rs 2.50 a minute on outgoing ISD calls from Rs
4.25. As a result of this initiative telecom tariffs are likely to fall soon.

“With the introduction of this regime, it is the death of distance for the
national calls now as there would be only one charge for the calls. Because of a
huge growth in the telecom sector, this reduction in ADC will not affect
BSNL's collections,” informed TRAI chairman Pradeep Baijal.

The new regime will come into effect from 1 February 2005 and TRAI would
review ADC rates within three to six months of its implementation on the basis
of examination of new data. “Last ADC regime had only 21 million mobiles,
while today there are more than 50 million mobile phones, so there is tremendous
growth in this sector. We will re-examine the data collected from this period in
about three to six month time. If the telecom sector continues to grow like
this, than we will further reduce the ADC,” he added.

Reacting swiftly to this announcement Sunil Mittal, chairman of Bharti
Tele-Ventures announced that the entire benefit of the ADC cut would be passed
on to customers. “New rates will be announced appropriately and I sincerely
believe that the entire benefit of this will be passed to customers,” he
added.

The regulator claimed that total ADC amount going to BSNL would remain
unchanged at Rs 5,000 crore. “This amount will remain unchanged because of the
exponential growth in the telecom sector,” Baijal added.

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