New Delhi March 27: Private telecom operators will not have to pay any levy to BSNL to compensate it for carrying out rural operations, sector regulator Trai announced today, a move that may hit BSNL's expansion plans in remote areas.

The levy called Access Deficit Charge (ADC) was being paid by the telecom service providers to compensate BSNL for offering rural services, which were considered unprofitable.

Besides, Trai has also announced the reduction on ADC on international calls to 50 paise from Rs 1 at present.

However, BSNL has been advocating for continuation of this levy. It was getting the ADC of Rs 5,000 crore annually till about two years ago from private players to compensate the PSU for providing services in rural areas, where private companies were reluctant to go.

Since BSNL has the largest number of rural subscribers, more than 90% of the fund collected was passed on to the state-owned company.

The ADC has two parts. First is 0.75% of Adjusted Gross Revenue (AGR) that service providers pay to BSNL and second, Re 1 per minute on international incoming calls paid to the PSU by international long distance service providers.

The regulatory body has issued the ninth amendment to the Interconnection Usage Charges (IUC) regulation that deals, among other things, with the ADC payable by private operators.

Through the amendment, Trai has decided to phase out ADC as a percentage of AGR from April 1, 2008, making all domestic calls free from the incidence of ADC from that date.