The move by the Telecom Regulatory Authority of India (Trai) to abolish the access deficit charge (ADC) paid by private telecom operators to Bharat Sanchar Nigam Ltd (BSNL)?technically for access to the latter?s network and justified as a contribution towards sustaining rural wireline networks?is welcome. By adhering to the roadmap laid down when this scheme was started, Trai has shown how temporary support systems should fade away once they have served their purpose. With telecom operators also paying 5% of their adjusted gross revenue (AGR) towards the Universal Service Obligation Fund (USOF), which is also meant to support rural telephony, there was not much sense in retaining the ADC. The regulator has also acknowledged BSNL?s social sector burden by recommending to the department of telecommunications (DoT) that the government grants the state-run firm Rs 2,000 crore per annum from the USOF for a period of three years for the purpose of sustaining wirelines installed before April 2002. Trai has also given BSNL time to prepare itself financially by first removing one component of ADC from April 1 and the second from September 30. Currently, ADC has two components. One, service providers pay 0.75% of their AGR to BSNL, and second, international long distance service providers pay Re 1 per minute on international incoming calls to BSNL. However, the second component has been halved to 0.50 paise from April 1 to September 30, after which it would stand abolished. Private operators stand to gain around Rs 800 crore collectively from the move, and have reiterated their commitment to pass on the benefit to consumers in the form of lower tariffs.
While tariff reductions are surely going to happen, especially in rural areas, one should not expect too much on this score?one, tariffs are already quite low in absolute terms, and two, operators may not find that the ADC abolition has altered their costing structure so dramatically as to make huge tariff slashes viable. As it is, mobile tariffs have been moving southwards, and would continue to move in the same direction, ADC or no ADC. This is a direct function of competition, and the country?s telecom market is one of the world?s most competitive, with as many as eight operators per circle.