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Phone tariffs may drop by 30%

December 03, 2004 13:53 IST

Telecom tariffs in India can drop by 30-40 per cent more if the Telecom Regulatory Authority of India goes ahead with its planned cut in the access deficit charge (ADC).

TRAI chairman Pradip Baijal said in Delhi on Friday that a cut in ADC can bring down telecom tariffs and boost the growth of the sector.

"I do believe that tariffs can fall by 30-40 per cent if we give appropriate policy direction," Baijal said.

ADC is a levy paid by private operators to state-run BSNL to offset its loss-making expansion for rural telephony.

Baijal said TRAI might announce a cut in ADC by Tuesday.

"I still have to convince my members to accept my proposal to cut ADC. By Monday or Tuesday we will submit our proposals," Baijal said.

He maintained that cut in ADC would not impact the ADC that is passed on to fixed line operators.

"We have tremendous opportunity for reducing ADC without hitting profits of fixed line because of enormous growth. We must encash on that growth by reducing ADC and thereby having another round of fall in tariffs," said Baijal.

He said when ADC was cut earlier the mobile subscriber base was 21 million which has gone up to 30 million. "We want to take the mobile subscriber base to 50 million," Baijal said.

"Unless you excite 70 per cent of the population in villages there will be no growth," TRAI Chairman said. To drive up teledensity in rural areas, tariffs must fall further, Baijal said, adding that the licence must allow broadband to have telephony so that tariffs can fall further.

He said that in the next Union Budget government levies on broadband should be slashed.

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