Trai seeks clarification on BSNL's tariff cut

The Telecom Regulatory Authority of India (Trai) has asked Bharat Sanchar Nigam Ltd to explain how the recently announced reduction in its long-distance rates was affected.

The move comes after the cellular operators alleged that BSNL was using the access deficit charges paid by the private operators to subsidise its long-distance calls.

COAI had said that BSNL was able to lower its STD and ISD tariffs by 25 per cent because of the payments made by private operators to the public sector company to enable it to offer subsidised rates for local fixed-line services.

On the other hand, BSNL said its move to reduce long-distance tariffs by 25 per cent was taken to remain competitive.

Senior BSNL sources said field reports were suggesting that long-distance traffic was drastically moving away from the company's network, which made it necessary for the company to cut tariffs by around 25 per cent.

Cellular operators have said: "We do not have any issue with BSNL dropping rates per say, but the fact that the company was doing it even as it claimed huge revenue loss, needs to be examined because the access deficit charges were imposed on us on grounds that BSNL's fixed-line business was incurring losses because of the subsidy burden."

COAI said the regulator should review the need for imposing the access deficit charges on private operators.

It has also asked the Trai to direct BSNL and other long-distance operators to offer the same settlement rates to other stand-alone access providers.

While BSNL had attributed the reduction in ILD rates to new settlement charges offered by VSNL, no explanation has been forthcoming for 25 per cent cut in std tariffs.