TRAI revamps ADC system

24 Feb 2006

India’s telecom regulator the TRAI has announced a revamp of the controversial Access Deficit Charges (ADCs), hoping to provide operators with an incentive to lower rates for domestic calls. ADCs raise around INR50 billion (USD1.12 billion) annually, the bulk of which goes towards subsidising the unprofitable rural networks of state-run fixed line incumbent BSNL; calls made on rural networks themselves are exempt from ADCs. The ADC on incoming and outgoing international calls will be slashed by around 60% to INR1.60 and INR0.80 a minute respectively from 1 March. At that date the per-minute ADC charge will be removed from all domestic calls and replaced by a revenue-sharing system whereby alternative operators will pay a reduced levy to BSNL. The TRAI hopes that the lower ADC charges will pave the way for operators to lower call prices for consumers. The regulator says ADCs will be reduced incrementally each year and removed altogether by March 2009.