THE ACCESS DEFICIT Charge regime is headed for a prolonged debate with the two opposing camps — the incumbent, Bharat Sanchar Nigam, and the domestic private telecom operators — holding diametrically divergent views. While BSNL is fundamentally opposed to the decision of the Telecom Regulatory Authority of India to scale down the charge applicable for a year from October 2004, the private operators claim that there is no justification for the charge and want it scrapped. Caught in the middle is TRAI. For, it had created the scope for this debate by recently recommending a switch in the charge payable on each call to a revenue-sharing regime linked to the adjusted gross revenues of each telecom operator. At present, the charge varies from Rs 0.30-0.80 a minute for domestic long distance calls to Rs 4.25 per minute for international long distance. As the service provider entrusted with the responsibility of extending telephony to unviable parts of the country, BSNL stands to get most of this charge, which is estimated at Rs 5,300 crore for 2003-04.

Weighing the pros and cons of this raging debate, it is clear that the contention of the private operators has greater merit. Viewed from their perspective, it is obvious that the incumbent, BSNL, has the market power, the finances and the flexibility of pricing to sustain its operations without this charge. In April, BSNL had done some hard bargaining with VSNL through which settlement rates on outgoing international calls were scaled down by over 50 per cent. Following these renegotiation of rates, BSNL reduced the international long-distance tariffs, but passed on only half the benefits of the lower settlement rate to its customers, a proof of BSNL's market power and flexibility in pricing. Moreover, consumers will stand to gain only if the charge is scrapped. Fixing the charge of Rs 4.25 per minute on both incoming and outgoing calls from all international long distance operators has only served to peg the consumer tariff at an artificially high level. If the charge is removed or scaled down sharply, it will straightway offer room for a downward revision in tariffs and thereby check the flourishing grey market in international calls.

Given the hardline stance of the contesting camps, it appears that TRAI can no longer tread the middle ground on this issue. Tinkering with the charge through a switch to a revenue-share regime is unlikely to leave either party satisfied. It is obvious that the TRAI methodology for arriving at the charge using historical values from BSNL's financial statements with suitable adjustments does not project the right picture. The only option available to TRAI will be to opt for the "Forward Looking Long Range Incremental Costs" used extensively in the developed countries to arrive at the charge. This approach alone will satisfy the two contesting parties and, also, offer a fair deal to the consumer.

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