The Telecom Regulatory Authority of India
("TRAI") has recently issued the ninth
amendment to the Interconnection Usage Charges
("IUC") regulation which deals, among
other things, with the ADC payable by private service providers to
the incumbent Bharat Sanchar Nigam Limited
The Access Deficit Charge ("ADC")
regime was first introduced by TRAI in the year 2003, with the
primary purpose of facilitating the incumbent to transit from
monopoly to competitive regime and give adequate time for tariff
rebalancing. Under the policy framework ADC was meant to be a
time-limited, depleting regime that was proposed to be phased out
in 2008-09 and any resultant responsibility of sustaining
incumbents rural wireline network transferring on Universal Service
Obligation Fund ("USOF").
The ADC as it exists today has two parts. One, the service
providers pay 0.75 per cent of their Adjusted Gross Revenue
("AGR") to BSNL and second,
International Long Distance (ILD) service providers pay INR 1 per
minute on international incoming calls to BSNL. Through the latest
amendment, TRAI has decided to phase out ADC as a percentage of AGR
from April 01, 2008. Thus, the ADC will no longer be applicable in
the domestic sector and all domestic calls will be free from the
incidence of ADC from April 01, 2008. Further, the component on the
international incoming calls would be payable at a reduced rate of
INR 0.50 (paise fifty only) for the period from April 01, 2008 to
September 30, 2008 after which this component of ADC would also
stand phased out. Thus, from September 30, 2008 there would be no
In order to support the incumbent's rural wireline
operations, as about 99.87 per cent rural lines belong to BSNL,
TRAI has recommended to the Department of Telecommunications,
Ministry of Communications & Information Technology
("DoT") that from April 01, 2008 an
amount of INR 20 billion per annum may be given to BSNL from USOF
as subsidy for sustaining wirelines installed before April 01, 2002
for a period of three years.
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