The talks about the Interconnect Usage Charges (IUC) have been raging in the industry. Mainly, the Telecom Regulatory Authority of India (Trai) has a lot of decisions to make on the matter. In the past, the issue has been surrounded by much controversy, and it still remains one of the most heated arguments in the telecom industry. Also, this is not the first time that talks of the IUC regime have surfaced on the regulatory level since the discussions about this have been ongoing since 2014 and even before, and then the decisions were made to bring down the IUC costs. However, this streak was being considered to be approaching an end as the IUC cost was to be terminated by the end of this year, altogether. Unfortunately, that does not seem to be happening as Trai wants to stick with the new IUC cost of 6 paise per minute for two more years. This entails a lot of things. Now, Trai has already floated consultation paper on the matter, but next week, the sector regulator is also set to host an Open House Discussion which is probably going to result in some kind of direction about where things will go ahead.
IUC Regime Now Affecting the Consumers
It is worth noting that for the first time in the industry, the rules about IUC have come to affect the consumers as Reliance Jio, the Mukesh Ambani led telecom operator has decided to levy the burden of IUC on its subscribers for every outgoing call that they make to other networks. In fact, the matter of IUC has snowballed into such a big one that Reliance Jio and the other two rival telecom operators stand poles apart on the issue.
Incumbents Receiving the nett IUC Payout
This has mainly to do with revenue and their underlying network technology. While the Vodafone Idea and Bharti Airtel network is made up of a big chunk of legacy network with 2G towers, Reliance Jio’s network is purely 4G. On top of this, Reliance Jio, being the biggest operator in the industry right now sees the most number of outgoing calls from its network to the rival telcos and hence the Mukesh Ambani led telco has to pay to these carriers to carry the calls on their network. Now, you can see why Reliance Jio would want the IUC cost to be gone altogether. Although Vodafone Idea and Bharti Airtel also have to pay a similar cost to Jio, the amount which they receive for IUC surely exceeds their payout given the network flow.
What Decision Will Trai Take?
Now coming to the topic of what lies ahead in the industry when it comes to IUC. For that, we would have to look at the previous Trai announcements, which clearly highlight that the regulator is in the mood for sustaining the IUC charges for two more years. The shift to the zero IUC regime has already been deferred a couple of times in the past few years, and this would be the third time that it happens again. On this matter, Reliance Jio has also been blamed for gaming the IUC regime by cutting down on its ringing time, whereas, Reliance Jio has retaliated by saying that these incumbents have not upgraded their network to 4G at a rate in which they should have and also they have been charging high tariff which is detrimental to the users.
If Trai decides to stick with the IUC charges for two more years, it is possible that Reliance Jio users might have to continue paying the 6 paise per minute charge for a lot more time than previously thought. At the same time, the incumbent telecom operators will be in support of the move since the IUC payout for them will continue to remain this way.