Telecom Regulatory Authority of India (TRAI) has initiated the process to review interconnect charges, which a telecom operator pays to other service providers for using their network to complete calls. With this the network interconnection and call termination charges are likely to change very soon. These charges have direct impact on tariffs that end-consumers pay.
TRAI has released a consultation paper on IUC seeking comments of stakeholders on a host of issues including the approach which needs to be adopted for prescribing the charge, methodology for estimating mobile termination cost and appropriate level for international termination charge.
The telecom regulator had specified the ‘Interconnect Usage Charges’ (IUC) in 2003 and subsequently the charges have been revised in 2006 and 2009.The prevailing IUC regime was notified in 2009.
At present, the mobile call termination charges for all local and national long-distance stand at 20 paisa per minute, which means a operator pays 20 paise per minute to other company on whose network call has been made.
The termination charge for incoming international long distance calls is 40 paisa per minute. The regulator in its last review had reduced the interconnect charges. For this, stakeholders are required to send their comments to the auction thority by December 11 and counter-comments by December 18.
TRAI said in a multi-operator multi-service scenario, an IUC regime is an essential requirement to enable subscribers of one service provider to communicate with subscribers of another service provider.Providing interconnection entails costs for which service providers need to be fairly compensated.
The regulator said primary purpose of an IUC regime is to facilitate inter-operator settlement.
In the meantime, In its 2009 recommendations, TRAI had fixed a mobile termination charge at 20 paise per minute for all local and national long distance charges. It had also raised the mobile termination charge for incoming international calls to 40 paise per minute from 30 paise, while putting a ceiling on carriage fee of 65 paise per minute for domestic long distance calls.
According to industry sources, about 15-20 per cent of the operators’ revenue comes from termination charges at present.
Meanwhile, the regulator has, in May 2013, issued new norms imposing five paise as termination charge on each transactional short message service (SMS) and two paise on each normal SMS on operators from whose networks the message originates. The new regulation – Short Message Services (SMS) Termination Charges Regulations, 2013 – has come to effect in June, 2013. Before this, the termination charge on SMS was under forbearance.
On the other hand, some operators like Bharti, Vodafone and Idea Cellular charge a termination fee of 10 paise per SMS based on bilateral agreement. However this move was not accepted by Reliance Communications, Tata Teleservices and Aircel who refused to pay the termination charges. The matter however then went to the court.
In addition, telcos get about 18 per cent of their revenue from value-added services, of which about 40 per cent comes from SMS.