Telecom regulations: The month that was - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks


Login Failure
(Please do not use this option on a public machine)
  Sign Up | Forgot Password?  

Telecom regulations: The month that was

Apr 20, 2007

In this series of articles, we shall be coming out with regular updates on the important happenings in the telecom sector that have transpired at the regulatory level. In this series, we shall enumerate the important regulations/announcements and gauge how they will change the scape of the telecom sector in India. Responses to consultation paper on Access Deficit Charge (ADC)
The main issues raised in the consultation paper released in January 2007 were:

  1. Should the regulatory authority continue with the present reduction trend in ADC?

  2. What should be the appropriate option for the collection of ADC?

To this the regulator had received responses from AUSPI, COAI and various telecom service providers asking it to continue with the reduction in ADC as planned stating the following reasons:

USO and ADC meet similar objectives and it is undesirable to have two different mechanisms in force to meet the same policy objectives.

  • Liberalization of the telecom sector has witnessed intense competition leading to an unprecedented growth of subscribers and reduction in tariff to levels, which are the lowest in the world. Having an ADC in such a competitive environment would mean that the private players are funding the operations of the incumbent.

  • Subsidies promote unfair competition and anti-competitive use of subsidies.

  • ADC inflates the price of subsidising services and reduces the demand for them.

As regards the appropriate option for collection of ADC it was proposed that the burden on domestic subscribers be removed and ADC be collected from ILD incoming calls only.

Idea Cellular Ltd. submitted compliance report on refund to cellular subscribers
The company had charged differential call charges (in Delhi service area) with respect to calls that terminated on the BSNL/MTNL networks vis-a-vis private GSM networks. The regulator had asked disallowed the charging of such discriminatory charges and had asked the company to refund to its subscribers such excess charges as had been collected from them. This resulted in 192,000 customers getting refunds of an amount totaling to Rs 13.6 lakhs.

TRAI lowered the Access Deficit Charge (ADC)
The regulator announced the lowering of the ADC applicable as follows:

  • ADC for 2007-08 reduced to Rs 20 bn from their previous levels of Rs 32 bn.

  • Complete removal of ADC burden from domestic consumers on outgoing international long distance calls (ILDC).

  • Per minute ADC on incoming ILDC reduced to Re 1 per minute from their earlier levels of Rs 1.6 per minute.

  • ADC on percentage revenue share basis halved to 0.75% of AGR (Adjusted Gross Revenues) of all service providers.

The move had been made in anticipation of:

  • Lowering of telecom tariffs

  • Greater usage of services as a result of affordable or lower tariffs.

  • Sustained growth of telecom services

  • Reduce arbitrage in international calls hence leave very less scope for ILD grey markets.

Recommendations to Department of Telecommunication on terms and conditions for resale in International Private Leased Circuits (IPLC)
'Resale' is the sale or lease of telecom services to an end consumer on retail basis after leasing from telecom service provider on a commercial basis at wholesale prices. Incase of resale of IPLC, resellers are required to take IPLC from International Long Distance Operators (ILDOs) and sell to end consumers such as software exporters, BPO units, Call centers, Banks and other small and medium enterprises (SMEs) that require to transmit a large quantum of data.

Allowing of resale of IPLC is likely to result in the following:

  • Provide an effective entry vehicle for new entrants that may result in the reduction in prices in the IPLC segment.

  • Improve customer service to end customers and business entities.

  • Stimulate the usage of existing network through innovative means benefiting the facility-based provider as also the end consumers.

  • Induce innovative services in terms of new billing terms and innovative tariff packages.

Equitymaster requests your view! Post a comment on "Telecom regulations: The month that was". Click here!


More Views on News

1,300% in One Year - Are You Kidding Me? (Views On News)

Nov 29, 2021

An amount of Rs 1 lakh invested in the midcap stock a year ago would have turned into Rs 15 lakh today.

Bharti Airtel's Humongous Rights Issue to Open on 5 October. Key Points Investors Should Know (Views On News)

Sep 23, 2021

Shares of Bharti Airtel trade near record high ahead of rights issue.

This Company has Quietly Built an Enviable Startup Portfolio (Views On News)

Sep 22, 2021

The startups era has just begun, and it will provide massive opportunities to those who can spot the right trends at the right time.

More than 450% Gains for Tejas Networks in the Past Year. What Next? (Views On News)

Aug 18, 2021

Shares of Tejas Networks are up 173% since January 2021. Is the rally justified?

Can Vodafone Idea Survive if Government Provides Support? (Views On News)

Aug 3, 2021

Despite the company making several efforts to improve its operational efficiency, its financial position has sharply deteriorated.

More Views on News

Most Popular

Infosys vs TCS: Which is Better? (Views On News)

Nov 26, 2021

In the post pandemic era, the top two IT companies in India are fighting to capture the growing demand for IT.

This Multibagger Stock Zooms 20% After Dolly Khanna Buys Stake (Views On News)

Nov 24, 2021

Shares of this edible oil company zoomed over 50% in three days after ace investor bought around 1% stake.

6 Popular Stocks that Turned into Penny Stocks (Views On News)

Nov 27, 2021

A look at popular stocks that crashed big time and never recovered, i.e. which went from 'Multibaggers to Multibeggers'.

How to Find Your Next 10-Bagger in this Market (Profit Hunter)

Nov 19, 2021

The #1 make or break factor in your portfolio you shouldn't ignore.

MobiKwik IPO Opens for Subscription Soon. Key Things to Know Before Subscribing. (Views On News)

Nov 20, 2021

The Rs 19 bn issue is set to hit the market soon.


Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms


Dec 1, 2021 12:19 PM