Maintain separate accounts for each business: Trai

In an attempt to prevent cross-subsidisation by telecom companies, the Telecom Regulatory Authority of India has asked all service providers to maintain separate accounts for each line of business, each geographical circle and each product on offer. The accounting separation has to be implemented from April 1, 2002.

"The proposed system, based on the principles of accounting separation, will help monitor and measure financial performance of individual telecom products/network services and help disaggregate costs to the level of network elements. It will also help in identification of cross-subsidisation practices in the industry," Telecom Regulatory Authority of India said.

This means that companies like Bharat Sanchar Nigam Ltd will have to maintain separate accounts for each of the 19 circles they operate in and for each long distance, cellular or fixed line service offered.

"By providing for maintenance of detailed cost records right up to the level of network elements, the system will help generate accurate information on costs, which is necessary for tariff and interconnect regulations," Trai said.

The Telecom Regulatory Authority of India has ordered all basic telephone operators, long distance operators, cellular operators, VSAT operators, radio paging, public mobile radio trunk service, global mobile personal communication service and Internet service providers to carry out the accounting separation.

Separation of network costs has also been suggested to unbundle costs of network elements.

Unbundled costs will provide a basis for study of the cost of interconnection arrangement and also provide inputs for cost-based tariffs.

The Telecom Regulatory Authority of India said relevant provisions under the Companies Act had also been kept in view, while framing the proposals and emphasis has been laid on reconciliation between financial reporting under the Companies Act and the Trai Act.