Financial Daily from THE HINDU group of publications
Friday, Feb 24, 2006
Financial Daily from THE HINDU group of publications Friday, Feb 24, 2006 |
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Regulatory Bodies & Rulings Info-Tech - Telecommunications Long-distance calls turn cheaper; subsidy cut 33% New regime to lessen burden on customers, private operators Our Bureau
New Delhi , Feb. 23 Telecom tariffs are set to take a big tumble with the Telecom Regulatory Authority of India today announcing reduced access deficit charges. The lower access deficit charges (ADC) will bring down the annual collections from the levy by 33 per cent to Rs 3,335 crore during 2006-07 from Rs 5,340 crore during the current fiscal. The decrease in the total subsidy amount, which is used to fund rural telephony, will enable all telecom operators to lower STD rates to Re 1 a minute from the present average tariff of Rs 2.50 a minute. Consumers can also expect ISD rates to come down by Rs 1.70 a minute across all destinations following a similar reduction in the ADC rates on outgoing ISD calls. At present, ISD tariffs vary between Rs 7.20 a minute (BSNL tariff) and Rs 14.24 a minute (private cell operators tariff). There will be no significant impact on local call tariffs from today's announcement.
Customers to gain
Telecom service providers said they would pass on the benefits on the long-distance segment to the customers. However, the extent of actual reduction in tariff in the long-distance segments will be known only in the next few days.
The TRAI trigger
The latest round of tariff cuts has been triggered by the following decisions from TRAI. First, from March 1 the subsidy burden will not be anymore on per minute basis on domestic calls but on a revenue sharing model. At present, this rate varies between 30 paise a minute and 50 paise a minute. The new regime has proposed to charge 1.5 per cent of the operator's annual revenue. While this will result in a net outgo of around Rs 1,287 crore from private operators, TRAI reckons that the move will bring down domestic tariffs. Second, the telecom regulator has fixed a flat ceiling rate of 65 paise a minute as carriage charges. This is the money taken by NLD operators from access providers for carrying their traffic. This rate is at a maximum of Rs 1.20 a minute at present for calls over 500 km and 20 paise a minute for calls less than 50 km. While the new ceiling could allow operators to decrease rates by 60 paise a minute for calls over 500 km, it could also prompt them to jack up the tariff for shorter distance calls.
`Competition' check
TRAI however feels that competition would keep the tariffs low. Both these measures will usher in One India STD rates for private operator's subscribers as well. On the international long-distance (ILD) front, though TRAI has kept the ADC on a per minute basis the rates have been reduced drastically. The ADC for outgoing calls has been put at 80 paise a minute, a 65 per cent reduction from current rates. On incoming ILD calls the ADC has been reduced to Rs 1.60 a minute, 50 per cent lower than the existing rate. TRAI said this would reduce arbitrage levels and hence shrink the grey market.
Related Stories: More Stories on : Regulatory Bodies & Rulings | Telecommunications
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