The Hindu Business Line : BSNL threatens to hike fixed line tariff

The reasons
Operational expenditure per line per month for rural telephones comes to Rs 643, recovery is only Rs 171 per month per subscriber.
Users may shift to mobile phones, broadband penetration may be hit

Thomas K. Thomas

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New Delhi, Feb. 15 After a hike in petroleum products, there could be an increase in the fixed line telephone rates. State owned Bharat Sanchar Nigam Ltd has told the telecom regulator that it will be forced to increase tariffs for fixed line telephones in case access deficit charges are withdrawn.

BSNL has warned that such a move could wipe out fixed telephone usage in the country as subscribers will prefer to take cellular connection.

BSNL has told the Telecom Regulatory Authority of India that while operational expenditure per line per month for rural telephones comes to Rs 643, it recovers only Rs 171 per month per subscriber.

“To recoup a part of these losses, BSNL will have to increase rental, call charges and decrease free calls in respect of its wire line services, both in urban as well as in rural areas.

This will make the fixed wire line services very expensive vis-a-vis cellular services and will cause further steep churn.

The common man in urban areas and all the customers of the rural areas will be adversely affected due to such increase in tariffs by BSNL to recoup its losses on account of abolition of ADC,” BSNL said.

The TRAI had earlier said that ADC would be abolished by April 2008 on the grounds that BSNL had received enough support from the Government.

Private operators, who pay the charges to BSNL, have supported the TRAI’s move.

However, BSNL pointed out that, on one hand, it was not being allowed to fix the tariffs for rural fixed line telephones based on market conditions and on the other, the regulator was withdrawing the subsidy support for fulfilling social obligations.

The State owned company said that non-sustainability of fixed line telephone services would also affect the growth of broadband services in the country.

“To achieve the desired level of penetration of broadband services in the country in urban as well as in rural areas with a view to bridging the digital divide, it is absolutely necessary that not only existing wire line networks are maintained, but also there should be adequate incentive for the service providers for further roll out of wire line networks, which is not possible if the requisite financial support through ADC is abolished,” BSNL said.

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Telecom operators welcome access deficit charge phase-out

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