Phasing Out ADC Will Benefit Telecom Consumers: CUTS

New Delhi, March 30, 2008

CUTS International has backed TRAI’s recommendation on the phasing out of Access Deficit Charges (ADC) issue. In a press release issued here today, CUTS Secretary General, Pradeep S Mehta, said that this move, apart from benefiting consumers, will help in creating a level playing field for service operators.

“In any event, it was incongruous and a tax on consumers as a double whammy i.e the existence of both ADC and USO tax. We agree with the TRAI’s view that in the light of high growth in the subscriber base and reasonable degree of competition among the private as well publicly owned operators, ADC should be phased out and merged with Universal Service Obligation Fund (USOF).” said Mehta.

CUTS has observed that as a result of support through ADC, BSNL was able to provide more access to telecom services in rural areas. But at the same time, the quality of service provided by BSNL was reported to be very poor. Consumers have suffered very much from the abuses resulting from the monopoly power exercised by BSNL.

Addressing the TRAI’s concern on extending service to rural areas, it has suggested to the authority to make it mandatory for all operators to ensure 100% coverage of the license area including remote areas. Since, a licence is issued for the whole circle/zone, it is justified to ask them to ensure full coverage. It will enhance the teledensity, which is currently at an abysmal level of 7 percent in rural areas. The USO fund is also available for subsidizing high cost-low returns investments.

“When the networks of all operators are available in remote areas, it will provide a choice to consumer to select a service provider. At the same time, operators will also find it profitable to increase their subscriber base in rural areas to exploit the market and recover the capital cost. As a result of competition, the tariff will come down and benefit the consumers in rural areas.” Mehta added.

CUTS has also pointed out that the gains resulting from abolition of ADC should be shared with consumers justly. Otherwise, CUTS will not hesitate in taking legal action.