Trai puts foot down on ADC

Firing a fresh salvo in its tussle with the department of telecommunications (DoT), the Telecom Regulatory Authority of India has said the law allows it to frame regulations and that the access deficit charge (ADC) should not continue after 2008.

In a letter to Telecom Secretary JS Sarma, Trai Chairman Pradip Baijal said, "There can be no dispute that the regulations framed by Trai have the force of law having been made (through) the process of subordinate legislation....(The) government may like to examine whether a policy direction needs to be issued in regard to subordinate legislation."

The communications ministry has gone on record expressing its reservations against further revisions in the ADC, which is a levy imposed by the regulator to fund state-run Bharat Sanchar Nigam Limilted's unviable rural operations.

As Trai was working towards halving the ADC, the DoT had sought to take over Trai's regulatory powers in the matter to retain the existing regime.

But the Prime Minister's Office advised the DoT to seek Trai's opinion before issuing a policy direction, asking the regulator to hang up on further revising the ADC.

The practice of levying ADC on all long-distance and international calls on a per-minute basis will also be replaced by a revenue-share scheme in the immediate future.

"Trai, in its consultation paper issued on March 17, 2005, has itself proposed the ADC as a percentage of annual revenue of operators and is moving in that direction. Hence, no direction from the government is necessary," Baijal said in reply to a DoT letter on Friday.

He also said competing operators could not be expected to wait indefinitely for BSNL to undertake a rebalancing exercise and subsidise the PSU for its fixed line operations during this period. "This will inhibit growth, competition and a level-playing field in the sector," the letter added.

The regulator has also said that after the ADC regime is dissolved, universal service obligation funds will have to be used to sustain BSNL's rural operations as "subscribers cannot be expected to fund both USO and ADC in perpetuity".

The letter has also cited international practices and said that ADC has been withdrawn in most countries, a few years after its introduction, as it has been found to be inefficient and anti-competitive.