Telcos Clash in Again as Trai Issues New Consultation Paper on Review of Interconnect Usage Charges

The Telecom Regulatory Authority of India (Trai) has lately issued a new consultation paper on the review of Interconnect Usage Charges (IUC). The IUC is defined as the cost that a mobile operator pays to another operator for carrying through or terminating a call. For example, if you call from one mobile network to another mobile network, then the first operator will pay a charge to the second operator for carrying the call. The originating network has to pay the IUC to the receiving network, and in India, this cost has currently been set at 6 paise per minute. The roadmap set by Trai for IUC charts out that the regulator will likely bring these charges down to zero by January 2020.

Reliance Jio Paying Hefty Sum as Interconnect Usage Charge

Now, Trai had charted out a roadmap for bringing down the interconnect usage charges for the telecom industry two years ago. This meant the bringing down of the IUC to zero by January 2020. But, there is a different issue which the industry is facing, and that has to do with network asymmetry. By this, we mean that the number of incoming calls from a particular network is more than the outgoing calls for the same. Currently, because of Reliance Jio’s inflated market share, most of the calls are being made from the networks of Jio only.

This means that Reliance Jio is giving a hefty sum in the name of IUC owing to the higher number of calls being made from its network. In the case of Bharti Airtel, who also provided the inputs regarding the issue, currently, 65% calls are made from Reliance Jio to Airtel network, whereas only 35% are made from Airtel. Trai has noted the details about this issue, and that is the reason why the telecom regulator has now floated a consultation paper on the same.

Reducing Call Ringing Time to Lower IUC Payments

Now there is a new issue which has come up in this row and that has to do with the reduction of call ringing time from Reliance Jio. The largest 4G only telecom operator has reduced its ringing time which is likely to have an impact on the IUC charges. By giving less time to the recipients of call on other networks, Reliance Jio is now expected to see more incoming calls from other networks instead of having subscribers on its network carrying calls on other networks.

A Vodafone Idea spokesman said to Economic Times, “we offer choice to customers via affordable products across 2G, 3G and 4G technologies, wherein users can opt for plans that best meet their needs for voice and data services”. On this issue, Airtel has also stated that the claim of ringing time reduction improving spectrum efficiency has no basis.

Now this move will help Reliance Jio reduce network asymmetry and thus save on IUC payments. If the charges fall to zero, then Reliance Jio would be able to save Rs. 3200-3300 crores per annum, according to the market calculations. Trai has already issued for the consultation paper for the review of Zero IUC charges. Once the consultation paper gets a go ahead from stakeholders, zero IUC charges will become effective from January 1, 2020.