Bharti Airtel Chief Executive Officer, Gopal Vittal, has some interesting things to say about the tariffs in the industry. The top-level executive of one of the largest telecom operators in the country has remarked saying that the tariffs which stay at the current level are unsustainable and they can’t stay for long. Vittal has also added saying that these tariffs should also go up eventually for the better health of the industry. He also expanded on the issue of Interconnect Usage Charges (IUC) saying that the industry is in wait of the outcome of the consultation paper that the Telecom Regulatory Authority of India (Trai) had floated a while back, on the issue.
Airtel CEO Talks About Unsustainable Tariffs
On the sidelines of the biggest telecom event going on in the country, Indian Mobile Congress 2019, Gopal Vittal said, “Over the last 20 years IUC has been absorbed in the cost of business and tariff is what it is and we feel that the tariff is unsustainable and should go up.” As per a Business Standard report, when asked about whether or not Airtel will hike tariff Vittal refused to make any comments and said that it is better not to speculate.
It is crucial to note that the war over the IUC matter heated up when Trai floated a consultation paper in the industry, asking stakeholders and the companies whether or not the levying period for IUC should be extended along with some other issues. To recall, as per Trai’s original plan, the industry was to make a gradual shift to a zero-IUC regime by the end of 2019. Meaning that from the previous limit of 14 paise per minute, then to 6 paise per minute, the cost for IUC was to come down to zero, but it seems that Trai’s plans have been delayed and there could be an extension to when Trai plans to shift to the zero-IUC regime.
Reliance Jio’s Shift to Charging IUC from Subscribers
It was after this consultation paper that the Mukesh Ambani led telecom operator, Reliance Jio, decided to levy an IUC on the subscribers. This meant the IUC would be passed on to the subscribers and hence they would be required to pay 6 paise per minute on calls that they make to other networks. However, with this, Reliance Jio also announced that the subscribers would be compensated with the equal amount of data as well, which would range from 1GB to 10GB. Not only this, but the company has also said that the IUC charge would be removed once Trai decides to dispose off the IUC charge altogether, thus making a shift to the zero-IUC regime.
This shift is likely to help Reliance Jio in cutting down its expenses which it makes as part of its IUC payouts to the other telecom operators. As per the estimates given, Reliance Jio is likely to save on Rs 650 crore every quarter owing to this new move. In the last quarter, the telecom operator had paid Rs 851 crore to Bharti Airtel, BSNL and Vodafone Idea as IUC fees.
Airtel Also Thinks Spectrum Prices are Exorbitant
Commenting on the spectrum that is to be put up for auction in a few months’ time, Vittal added that the spectrum prices are very much on the high side and they are exorbitantly priced. He specially added that the 5G spectrum and the 700 MHz spectrum were very high. He further said that to have a good experience, the telco would require 100 MHz of the 5G spectrum which would cost Rs 50,000 crore. Not only Bharti Airtel, but Vodafone Idea have also joined the unison on the idea of spectrum prices being too high.