Telecom firms warned against refusal to pass ADC withdrawal benefit to users

The government today warned telecom service providers of action if they did not pass on to consumers the benefit of the phasing out of the access deficit charge since 1 April. Private telecom operators had been paying this levy to state-owned BSNL for taking up rural telephony.

Replying to supplementaries during question hour, minister for communication and IT A Raja said the phasing out of ADC by telecom regulator TRAI would lead to a gain of between Rs500 crore to Rs1000 crore to the private firms like Airtel and Vodafone.

Raja said the spirit behind TRAI's decision was to benefit the consumers and call tariffs should be reduced. If the gains are not passed on to consumers, Raja said the government would take note of it. "Benefit to private operators must reflect on teh tariff. If not, government may take action," without elaborating the nature of the action they could face.

Raja's reponse was to the allegation in Parliamnnt that companies like Airtel and Vodafone had formed a "cartel" and were profiteering from the withdrawal of ADC.

Expressing concern over the impact of the withdrawal of ADC on Bharat BSNL, Raja said the loss to the state-owned firm would be compensated from the Universal Obligation Fund (USO). He, however, said the government was not entirely in agreement with this concept and "if necessary the matter can be taken up with TRAI.

India does not follow a policy of tariff fixation, which is governed by market forces.