International calls will get cheaper after the telecom regulator cuts the access deficit charge (ADC) on them as part of a plan to reduce tariffs in one of the world’s fastest-growing mobile telephony markets.
The reduction comes into effect from 1 April.
Under the new regime, there will be no ADC on outgoing international calls, compared with the previous charge of 80p a minute and the charge on incoming overseas calls will be cut to Re1 a minute from Rs1.60.
Under the old regime, the government collected ADC by charging companies 1.5% of their annual gross revenue—Rs1.60 a minute for all incoming international calls, and 80p a minute for all outgoing international calls.
The amount collected from this charge, which is being replaced by an alternativeplan, is used mainly by the state-run Bharat Sanchar Nigam Ltd to fund the unprofitable expansion of services inrural areas.
The regulator has also halved the share of revenue that phone companies contribute to the fund to 0.75% of gross sales. The changes will result in the estimated access deficit charge collection falling from Rs3,200 crore to Rs2,000 crore in 2007-08.
In an earlier effort to cut end-user tariffs, the regulator reduced the fee that phone companies charge for conn-ecting each other’s users (called interconnect charge) by between 23% and 29% on 2 February.
The extent of charge reduction left mobile telephony companies disappointed.
“We had expected the total ADC to come down to Rs1,600 crore; the burden is 25% higher for the current fiscal,” said T.V. Ramachandran, director general of Cellular Operators Association of India, an industry lobby.
The Telecom Regulatory Authority of India (TRAI) has already announced that the ADC regime will be phased out and merged with the universal services obligation fund.
This fund is to be used to develop mobile telephony infrastructure in rural areas where telecom services are considered unremunerative.
However, encouraged byrecent growth in rural areas, several companies have offered to roll out networks and services without subsidies from the fund.
BSNL, for instance, has asked for just 20% of the subsidy to construct towers in around 60 specified rural areas (under the bid system, companiessay how much of the subsidy they want and the company that asks for the least subsidy wins the bid). The company has asked for no subsidy at all to roll out mobile telephony services in 81 specified rural areas.
PTI and a staff writer contributed to this story.