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Buzz on lower mobile bill

New Delhi, March 27: Local and domestic long distance mobile call tariffs may drop further, thanks to telecom regulator Trai’s decision to do away with a fee that private telecom operators pay to state-run BSNL.

Mobile companies plan to pass on the benefits of the move to subscribers. However, they are unwilling to specify the quantum of discount they intend to pass on.

Trai said access deficit charge (ADC) levied on domestic calls would be scrapped from April, while that on international calls would be initially halved to 50 paise per minute before phasing it out from October this year.

“The rule is outdated and it’s good it’s being phased out,” said Mahesh Uppal, a telecom analyst.

ADC is a type of tax paid by private telecom operators to the government for failing to keep their commitment to roll out telecom services in rural areas. The money is used by companies such as the state- run BSNL to connect villages.

“We need to nevertheless fund BSNL through the USO fund (set up specifically to create rural telecom network),” Uppal added.

At present, mobile service providers pay 0.75 per cent of their gross revenue for domestic calls as ADC, and Re 1 per minute on all international incoming calls.

Bharti Airtel welcomed the regulator's move and said it would pass on the benefits to its customers. The firm said it would announce the details within a week, after consulting the telecom regulator.

A Vodafone Essar spokesperson said, “We welcome the move. We are committed to passing on the benefit to our customers in an equitable manner and will announce it shortly.”

According to industry analysts, growing revenues, a rising subscriber base, emergence of wireless phone connections and a mobile penetration of nearly three times compared with fixed lines — ADC is levied on fixed-line calls too — has reduced the relevance of the subsidy.

BSNL, however, wanted the levy to stay as any change would affect its expansion plans in remote areas.

Trai has decided to recommend to the government to provide BSNL Rs 2,000 crore annually from the universal service obligation fund for a period of three years to compensate the loss of ADC revenue.

BSNL was getting Rs 5,000 crore annually through ADC till about two years ago from private players.

Following Trai’s announcement, telecom stocks soared today.

The Bharti stock rose 2.68 per cent to close at Rs 824.65, while Reliance Communications gained 2.27 per cent to end at Rs 538.05.

The Idea Cellular scrip also rose 2.13 per cent to finish at Rs 103.25.

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