TRAI to phase out ADC

Calling friends or family living overseas will soon get a whole lot cheaper. The government has decided to slash a tax that private telecom companies were forced to pay to state owned BSNL and the tax cuts run deep.

The tax called access deficit charge will now be zero for outgoing international calls from 80 paise per minute.

ADC on incoming international calls has been cut 38 per cent from Rs 1.60 per minute to Re 1 per minute. There is relief on the domestic front as well. ADC on gross revenues is down 50 per cent for this year.

So telcos instead of paying 1.5 per cent of their revenue as ADC will now have to pay just 0.75 per cent of their revenues as ADC.

All this will cut the total ADC amount by Rs 1,200 crore (Rs 3,200 cr to Rs 2,000 cr). The cut in ADC could have been even greater but for disagreement between BSNL and private telcos on ADC calculation and payment.

Cutting call rates

Telecom operators like Bharti, Hutch and Idea are happy with the idea of an ADC cut but they feel that the amount of ADC could have been reduced further. However, the good news for customers is that atleast some of the operators are willing to pass on the benefit by cutting call rates.

The telecom regulator TRAI has said that it will stick to its decision of phasing out ADC by next year.

Besides, even though this round of cut in ADC is likely to shore up the bottomlines of telecom companies, consumers will only benefit if these companies decide to pass on some of the benefits to them.