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 ("BSNL").
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 ADC.
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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