Date:30/10/2003 URL: http://www.thehindu.com/2003/10/30/stories/2003103007800100.htm

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Mobile, interconnect rates revised

By Our Special Correspondent

NEW DELHI OCT. 29. The Telecom Regulatory Authority of India today announced new inter-operator settlement rates that could lead to higher STD and ISD tariffs.

At the same time, the new rates will ease the pressure on Bharat Sanchar Nigam Limited (BSNL) to increase the local call rates or rentals to make up for loss-making services in rural and unviable areas.

A huge amount of the access deficit charge (ADC), a component of Inter-connect User Charges (IUC), will flow to BSNL to make up for the losses suffered in providing local access. The new regime will be implemented from December 1.

No operator was willing to comment on the new ADC/IUC regime because of complex calculations. The cellular industry and basic phone companies other than the BSNL have reasons to be displeased. The former because they had questioned the rationale of the ADC and the latter because under the new TRAI formula, they will get a much smaller amount than what they were getting earlier. But the net outgo for the cellular sector will remain the same.

TRAI, however, did not subscribe to the view that the costs of some services might go up. "We feel that in none of the categories, tariffs should go up. Rather they should come down as the net impact of the IUC plus the ADC has either been reduced or has remained the same in the revised regime leading to a downward pressure on tariffs,'' said the TRAI chairman, Pradip Baijal.

The first ADC/IUC, announced early this year, was beset with technical problems and a burden on the companies as they amounted to 30 per cent of total revenues. "We are seeing that the power sector is collapsing from the pressure of cross-subsidy. So we had two options in the telecom sector — either to remain with the present regime which is unsustainable or to change it. We have, therefore, reduced the incidence of ADC from 30 per cent to about 10 to 12 per cent,'' said Mr. Baijal. As against the annual IUC of Rs. 13,000 crores, the impact would be reduced to Rs. 5,000 crores. BSNL will get the bulk and other basic phone companies the remaining 10 per cent.

The main aim was to help the BSNL, which cannot recover the cost of local access because the Government refuses to allow it to increase fixed line services, used extensively by the common man. Under the present regime, 90 per cent of the ADC came from the BSNL and most of it was paid back to the company. But new basic phone companies, with little or no social obligations, as well as the MTNL with operations in the revenue-rich metros of Mumbai and Delhi also cornered a part of the outflow.