NEW DELHI: The Telecom Regulatory Authority of India (TRAI) has released a consultation paper on "Accounting Separation and Formats for Accounting/Regulatory Statements". The paper is intended to initiate the process of laying down the accounting guidelines in respect of reporting requirements for financial monitoring of service providers. The consultation process on accounting separation will enable TRAI to analyze the costs, revenue and capital employed etc. in major areas of the service provider’s business so that regulatory decisions could be taken.
Last year, the TRAI had carried out an elaborate exercise on tariff re-balancing, based on cost data for fixing tariffs. This exercise culminated in the release of the Telecom Tariff Order 1999. During the tariff re-balancing exercise, it was felt that cost allocations for different services in an integrated services network is quite a difficult task. Lack of source-wise unbundled cost data proved to be a major constraint in determining the cost of service.
The accounting separation exercise would help the regulator in identifying the instance of cross subsidization of services and strengthen TRAI’s capabilities to provide regulatory supervision. Failure to design appropriate accounting procedure can often turn out to be the key reason for not realizing the potential gains of opening up the sector. It is hoped that the consultation paper would generate useful inputs from all stakeholders and has to be furnished to the Secretary, TRAI by June 2, 2000.