To sustain the subsidy for village telephony, the finance ministry has said India must keep charging high fees from international calls terminating in the country and this should govern its stance at the World Trade Organisation negotiations on trade in telecom services.
The Access Deficit Charge is a levy on all long-distance calls and is aimed at supporting the rural rollout obligations of the state-owned Bharat Sanchar Nigam Ltd.
Terminating a call in India is far costlier than in most other countries: all incoming calls are charged a per-minute Access Deficit Charge of Rs 3.25 and a termination charge of 30 paise.
Indian telecom companies, on the other hand, pay only 30-60 paise a minute for calls terminating on foreign networks, most of which do not subsidise rural telephony in their home countries.
According to estimates by the Telecom Regulatory Authority of India, a third of the Rs 5,000 crore (Rs 50 billion) collected annually as the Access Deficit Charge is generated by incoming international calls.
"A significant portion of the revenue earned from international telecom services is being used to fund rural telephony. Till such time as the teledensity of the country reaches a level of 30 (from 10 now), there is a need to continue to utilise this source for providing affordable services in rural areas," the finance ministry has said in its recommendations on India's stand at WTO negotiations.
The finance ministry has said India must not extend the most favoured nation status for telecom services to other countries.
India is bound by WTO rules not to levy the Access Deficit Charge on calls from countries to which it has extended most favoured nation status. If the status is extended to select countries, calls to India could be routed through them to save on the charge.
"As India receives many more international calls than it makes, its operators earn considerable revenue from the high termination charges. But most of it is passed on to BSNL in Access Deficit Charge," explained an industry source.
The finance ministry's recommendation assumes importance as the telecom regulator will soon announce a revenue-based Access Deficit Charge for national long-distance calls and is likely to retain the per-minute system for international calls.
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