Do We Need Still Lower Mobile Tariffs? – TRAI Abolishes ADC
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The Telecom Regulatory Authority of India (TRAI) has decided to exempt the private telecom players from paying the Access Deficit Charges to the stat-owned BSNL. This might see some further lowering of tariffs in the country. India already has the world’s lowest mobile tariffs. The move by TRAI will further lower the tariffs. Tata Teleservices, Bharti and Vodafone have all decided to pass on the benefits to the end consumer “wherever possible”.
A spokesperson of the leading CDMA operator Tata Teleservices said,
“We will be passing on the benefit to our customers wherever possible,”
Bharti Airtel said,
“We are committed to passing on the benefits of ADC relief to the customers primarily in the rural areas as desired by TRAI.”
So what is Access Deficit Charge (ADC)? Well, India is a largely rural nation. A majority of the population lives in the villages. The income is still below par in these areas. The government is committed to provide inclusive growth to the nation. So, these far off rural areas should also get the benefit of the telecom revolution. This is done by BSNL, as the telecom face of the government. So, BSNL provides the telecom services to these areas at rates much lower than the market rates. Earlier this was cross-subsidized by local and Long Distance Calls but the the competition in the telecom sector soon made this unfeasible. If BSNL had still cross-subsidized its rural offering with its plans in the urban areas, it would have had to charge higher in these areas. The private players were already touching rock-bottom prices and so, for BSNL to stay in the business it was necessary that it priced it products and services competitively. However, it still had to offer subsidized rates in the rural areas, thus putting it into losses, not faced by the private players. So, TRAI mandated that all the other telecom players pay the Access Deficit charges to BSNL, to subsidize its operations in the rural far-off areas.
There is some relief for BSNL as TRAI has decided to recommend to the government to pay Rs.2000 crore to BSNL for a period of three years to compensate for the loss in ADC.
The table below gives the Access Deficit Charges rates.
Well, it can be said that lowering of tariffs is going to benefit the consumer, but I would argue that providing cheaper call rates to the rural population was far more important. An
important question to ponder over is, do we really need still lower tariffs. They are already at an all-time low, and the lowest in the world. BSNL was doing a good job of providing telecom access to the rural population. Talking of “inclusive growth” it’s important that these people have access to affordable telecom and computing solution. I actually don’t mind paying Rs.0.50 per minute extra, if that money is utilized to help a poor woman talk to her husband working in the adjacent village.
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well Ankit…u r a man dude….y r u writing it as WE INDIAN WOMEN in the last para….well jokes apart….this is the point I wanna make that y have u concentrated ur thoughts only on Indian women not on men….would an Indian man not like to talk to his wife in an adjacent village….and yeah I do feel that we people who can afford paying Re.0.50 more per call can bear that to let the rural India get connectivity at lower rates..I feel this was not rite on the part of TRAI to lead BSNL into further losses…..
Nice thought dude,, when I read about this thing few days back, this is the first thought that came to my mind. We already got the best..cheap!!.. rates in the world,, what is the need of lowering it further..??
The first thing that came to my mind was if government is able to give away money to public in a sector where there don’t really need it.. Why not compensate it on something like fuel prices n all..?! I know that the system must be a complicated one, but then it’s all going to the government.. a strategic balancing act could do wonders. I believe we already have such policies, just need to apply it more appropriately.
@Anshu
Dude, I didn’t write it. See again. And I just gave an example of a woman talking to her husband. It can be a man talking to his wife as well. I agree.
@ Sameer
Thanks for commenting.
The system sure is complicated. And more so in India primarily because of the variation in economic and other psychogeographic conditions.
Sure, cross-subsidizing is one way. But why push only government sector into loss. I strongly believe those who are able should come forward to help the ones that are lacking even in basic amenities.
I trust this is what will constitute the “inclusive growth”.
Another thing, I dunno why, but somehow I am very delighted on seeing a government company making profits.
Pleasure!!
Definitely! Many are coming in. I read about how Sudha Murthi is doing her bit. But it will have to be from everyone.
We all know that if we really want to, we can do our contributions, our status is just an illusion, which probably we only create to stay away from the very responsibilities that we charge the government for.. sad, but true..!
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We should lower the call rates of all the local calls and STD calls to such an extent that even a beggar should not worry when he makes a call to any one in India.
