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Rate war threatens to trigger telecom revolt

New Delhi, Aug. 30: Telephone users, brace for disruptions from September 10.

Private telephony operators and Bharat Sanchar Nigam Ltd, the country’s largest service provider, have threatened to stop patching each other’s calls from that day.

The latest spat is over a fee called an access deficit charge (ADC) which private telephony operators have to pay to BSNL for fielding their calls.

The ADC is a charge that is collected from all telecom operators to enable telephone companies — only BSNL qualifies at present — to provide services in rural and inaccessible areas. In effect, only private telephony operators pay the charge while BSNL doesn’t.

The private operators have threatened to stop paying the fee from September 9 and BSNL has threatened to stop taking their calls. The private operators have said that if BSNL blocks their calls to its network, they will take similar action.

They claim that the fee gives BSNL the firepower to muzzle competition in the industry.

The private operators have paid Rs 3,900 crore as access deficit charge since February 2003. They contend that BSNL is dipping into this fund to subsidise the cost of its various services and that is how it has been able to slash tariffs.

Last week, BSNL cut STD call rates by almost 60 per cent and other call tariffs by 33 per cent, igniting a rate war in the industry. The new BSNL rates come into effect from September 10.

BSNL officials rubbished the charge that they are dipping into the ADC to subsidise other value-added services and spark the latest round of tariff cuts.

The row forced Bharti group’s Airtel to hold back the announcement of its tariff cuts today.

The dispute is now moving towards the Telecom Regulatory Authority of India, which has to find a solution by September 9 if the private operators stick to their threat.

The Cellular Operators Association of India (Coai) has sent a letter to the telecom regulator alleging that BSNL’s latest round of rate cuts were possible because the cellular industry was subsidising the state-owned company’s prices by paying the ADC.

Coai director-general T.V. Ramachandran alleged that the ADC provides BSNL with a comfortable financial buffer and incentive to slash prices with impunity, which none of its competitors can match.

A BSNL board member said: “We are not touching ADC to subsidise our other services. It is irresponsible of them to blame us. We have been authorised by Trai to use the ADC to offer telecom services in rural areas.

“If the problem isn’t resolved, we will respond in a suitable manner. This could include blocking calls from their networks.”

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