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Trai seeks transparent accounts

New Delhi, Dec. 27: The Telecom Regulatory Authority of India (Trai) today asked all telecom service providers to maintain a separate accounting system for their various telecom services.

The regulator released a system on accounting separation (SAS) that enjoins telecom service providers to maintain a detailed accounting and financial system for each service. A copy of the release has been forwarded to the department of telecommunications (DoT).

The proposed system, based on the principles of accounting separation, is aimed to monitor and measure financial performance of individual telecom products/network services and help de-segregate costs to the level of network elements. It would also help in identification of cross-subsidisation practices in the industry, wherever these exist.

By providing for maintenance of detailed cost records right up to the level of network elements, the system will help generate accurate information on costs, which is necessary for tariff and interconnect regulations.

The regulator in a release said, “Trai's document on accounting separation will go a long way in promoting healthy competition with adequate mechanisms built in to detect unfair competitive practices. It is especially relevant in the era of competition and liberalisation with integrated operators providing multiple services.”

While the system is mainly aimed at enabling better monitoring and control by Trai, the new system is also expected to help operators establish a more comprehensive system for arriving at product/network service wise costs and revenues and thus enhance their operating efficiency.

The system provides for detailed accounting separation for integrated service providers providing basic, cellular, national long distance (NLD), international long distance (ILD) and internet services. A much simpler framework for accounting separation has been proposed for companies providing services in a single circle or city and those companies providing radio paging, public mobile radio trunking service, global mobile public communications system and V-SAT services.

“The accounts would have to be separated for each telecom service. This separation has been suggested to measure financial performance of individual services and to identify cross subsidisation across services,” states a Trai order.

The operators will also have to maintain geographical separation, product/network service-wise separation and network costs.

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