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The Telecom Regulatory Authority of India (Trai) has
said that access deficit charges (ADC) can be brought
down further.
India's telecom market is among the fastest growing in
the world and the tariffs are among the lowest in the
world - an average of less than two US cents.
A reduction of ADC would mean further lowering of
telecom tariffs.
Who pays the ADC?
The ADC is paid by operators to BSNL mainly to undertake
rural telephony services and currently stands at Rs
5,000 crore a year. As of now the ADC is fixed at 11 per
cent.
Why is there scope for reduction of ADC?
In 2003, there were 13 million mobiles in India. Today
there are 47 million.
According to Trai chairman Pradeep Baijal, with such
volumes, margins are with the operators, therefore
government and operators must work towards bringing down
the tariffs.
Hence, there is space for reducing ADC.
Will the ADC cut be uniform?
ADC is differential on different calls. Therefore the
reduction will be differential on different calls,
according to Baijal.
It will be different across segments like national long
distance, local or international.
Why is the Trai thinking of reducing ADC further?
To boost mobile growth.
Baijal says that unless ADC is brought down from the
current level, pushing growth in the mobile segment
would be difficult.
ADC must come down to introduce lower tariffs and unless
tariffs go down further, the kind of growth that China
has witnessed will not happen in India.
Lower tariffs will mean growth in the rural telecom
market and that market is huge.
Apart from ADC, what else can be reduced?
According to the Trai chairman, not just ADC, even
Universal Service Obligation (USO) and revenue share
paid by operators to the government must also come down.
"In the unified license penultimate recommendations, we
have recommended that," he said.
"We have a strong case for that. If you reduce the
revenue-share, the addressable market will be higher and
the government would be compensated by growth rather
than revenue,” he said, adding the present Finance
Minister is very supportive of this idea.
Will all this result in predatory pricing?
The tariffs are to be decided by market. Trai says that
it will not allow predatory pricing.
This decision was taken three months back and it has
disallowed proposals of Reliance and BSNL in this
direction.
Other countries allow this. "And this decision allows a
relief to the consumer because he gets a lower tariff.
And lower tariffs could be sustained by the operators
through growth, therefore we allowed this," says Baijal.
Source: The Economic Times |
