Trai Considering to Review IUC Charges on Messages

Published by
Rudradeep Biswas

The telecom regulator, Trai is planning a review of the charges that telcos pay each other for text messages, and possibly even consider discarding the charges, according to an ET report. The regulator will be issuing a consultation paper to seek stakeholder views on revising the interconnection usage charge (IUC) for SMS. This may include the possibility of scrapping the interconnection fees altogether, people aware of the matter told ET. The IUC for text messages is paid by a telecom operator to the network receiving the SMS. In a way, it is similar to the IUC for voice calls, which was lately reduced

by 57%.

“There’s discussion to review the IUC on messages… it has not been changed for a long time and the industry situation has changed since then,” said one person familiar with the ongoing matters at the Telecom Regulatory Authority of India.

Eliminating these charges can be considered for both commercial and non-commercial messages since present levels are already low, the person added.

However, Trai is yet to make the final call regarding their decision. So far, the regulator has only been discussing the matter internally. The current interconnection charge is five paise per commercial text message and two paise per SMS for individual consumers.

The possible review takes place when consumers have increasingly taken to internet chatting apps like WhatsApp and Facebook Messenger to send messages instead of SMS. The move might still trigger another clash with the older telecom operators.

At present, the revenue

from traditional messaging makes up 1-1.5% of the industry’s total revenue. Reducing or scrapping the charge for text messages will further reduce revenue for cash-strapped telcos, who have already contested the decision to reduce IUC on calls.

“There will be the impact, albeit small, and it will be questioned since the revenue as such from this service is very small but it is still revenue inflow,” a senior executive said, asking not to be identified.

Last year in October, Trai had cut IUC for voice calls to 6 paise a minute from 14 paise a minute. They also decided to scrap the charge from January 1, 2020. This move evoked sharp responses from Airtel, Idea and Vodafone, who alleged the regulator was favouring Reliance Jio Infocomm.

The regulator defended the decision saying it was in the interests of consumers as well as the industry. Airtel, Vodafone and Idea, on the other hand, wanted IUC on calls to recover their investments in the networks.

IUC charges usually benefit larger telcos since more calls and SMSes terminate on their networks. Cutting IUC will benefit Jio which has less customers than all the three combined. The reduction in IUC is spelling doom for Airtel and Idea, which are already fighting Jio’s disruptive prices. The big three networks of India have moved the Bombay HC against the regulator’s IUC cut and hearing are still going on. It will, therefore, get hard for Trai to convince the telecom operators to shed IUC charges on the SMSes.

Rudradeep Biswas

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Published by
Rudradeep Biswas

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