Reliance Jio IUC Cost Has More Implications Than Just Pricing

The Mukesh Ambani led telecom operator, Reliance Jio, has been in the headlines a lot lately not only because the telecom operator has released its quarterly earnings report just a few days back but also because of its move of introducing the Interconnect Usage Charges (IUC) for the customers. The long persisting rivalry in the telecom industry which was going over the issue of how long the calls of customers should be ringing ended with Reliance Jio bringing a new rule of charging 6 paise per minute on all outgoing calls to other networks. However, Jio is not on the hook here entirely for the implementation. The situations which led to the levying of these charges have been brewing for two years now. But, now that the Mukesh Ambani led telco has introduced this charge, there are definitely going to be ripples in the industry. Here is how the introduction of the IUC will bring an impact on the subscribers and the telecom industry.

Withdrawal of Recharge Plans

Now the first thing that some of the subscribers will notice in the Reliance Jio portfolio is that the telecom operator has done away with some of its low-cost sachet packs as the IUC charges have made their way to the portfolio. The sachet packs which have been removed from the Reliance Jio portfolio include the Rs 19 and the Rs 52 sachet prepaid pack. To recall, the Rs 19 sachet pack used to offer benefits for a single day with unlimited calls for a day, 150MB data and 20 SMS. This was a good solution for subscribers who just wanted a quick fix for their Reliance Jio number. Whereas, the slightly higher priced Rs 52 prepaid plan used to offer 1.05GB data benefit for the period of 7 days along with unlimited calling and 70 SMS for the entire validity period. But, with the launch of the IUC top-up vouchers, these sachet packs have gone missing from the Reliance Jio prepaid portfolio.

Benefit to Other Telecom Operators

If you have been following the telecom industry for a while, then you would know that the decision of Reliance Jio to charge 6 paise per minute on outgoing calls to other networks was not well received by the subscribers. On Twitter, the subscribers vented out their frustration while a meme-war followed on other social media platforms. This hints that for a short time, other competing telecom operators like Vodafone Idea or Bharti Airtel could gain subscribers. The Ind-Ra report on the matter also highlights a similar trend that although Reliance Jio will witness a rise in its ARPU, the other telecom operators will also gain a few subscribers from this move of Jio.

Other Telecom Operators Could Follow on Footsteps of Reliance Jio

While the above-mentioned migration to other telecom operators will happen over a short span of time, there is a slight chance that the other operators might also cap calling benefits in some way for the subscribers by a monetary method. We say this because the Telecom Regulatory Authority of India (Trai) could defer the transition to a zero-IUC regime by two more years which means that the telecom operators would have to continue paying the IUC of 6 paise per minutes to other operators for carrying their calls. Now while Reliance Jio will continue charging this amount from its subscribers, the other operators are not doing the same and this could hurt their finances over the coming quarters, thus pushing them to make a similar move.

Reliance Jio Subscribers Could Be Attracted to OTT Applications

Lastly, while Reliance Jio continues to charge for its outgoing calls to other networks, a chunk of the population will be drawn to OTT apps like WhatsApp for making voice calls to their contacts. This would mean that customers would shy away from paying extra for these calls and would instead make these calls over the mobile internet, something which Reliance Jio offers at a very low price.

Arpit Sharma

Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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Arpit Sharma