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India: TRAI considering future of access deficit charge Print E-mail
Wednesday, 26 March 2008

The Telecom Regulatory Authority of India (TRAI) has called a meeting with telecom sector representatives to discuss an alternative model of imposing access deficit charges to fund the roll out of rural telephones.

TRAI had promised to end the ADC by 2008. However, political reasons could be driving TRAI to continue with the charge for at least one more year. According to government sources, the method of imposing the levy could be modified. Today, operators pay a percentage of their annual revenues as ADC.

One model proposed by TRAI involves giving a discount worth US$ 5.00 to each rural subscriber. The model has not been finalised.

ADC was imposed on telecom operators by TRAI to subsidise services in rural areas. Since BSNL has the largest number of rural subscribers, over 90% of the ADC funds have been allocated to state-owned BSNL. BSNL is in favour of extending the ADC while private mobile operators are opposed to continuing the levy.

“There is no justification to continue the ADC regime any more. TRAI should stick to its commitment of ending the charges by April 2008,” said a representative from a mobile operator.

“The TRAI had itself said in its consultation paper that ADC was not required any more…We don’t think there is any rationale to subsidise rural telephony any more as operators are themselves rolling out services in these areas,” said an industry representative.

Source: The Hindu Business Line - WDR/Intelecon Regulatory News.