Will the 6 Paise IUC Be A Nightmare For Incumbents Telecom Operators?

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The Telecom Regulatory Authority of India (TRAI) today slashed termination charge for all mobile to mobile calls to 6 paise per minute down from 14 paise per minute. The revised IUC charge will be effective from October 1, 2017, and will be ultimately reduced to zero from January 1, 2020.

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IUC or interconnect usage charge is a fee that the caller’s operator needs to pay to the other operator if a mobile call terminates at the latter's network. For example, if you are an Idea customer and make a call to Vodafone, Idea has to pay 6 paise per minute of IUC to Vodafone for the call. The IUC is levied on the calling subscriber by the caller’s telecom operator. A major part of the revenue for the telecom operators come from the IUC and the incumbent operators have a cumulative debt of Rs 8 lakh crore.

TRAI’s order is a positive for Reliance Jio Infocomm as it has been demanding a zero IUC earlier. The future is 4G as 4G networks have only one IP network for both voice and data, unlike 2G and 3G that have two distinct networks for voice and data. A 4G network transfers voice as a data packet which occupies smaller bandwidth. Reliance Jio is currently the only telecom operator whose entire network is built on the latest 4G VoLTE(Voice over Long-Term Evolution) technology.

There has been a gradual decrease in Interconnect Usage Charge since its inception. In 2003 the interconnect mobile termination charge was 50 paise per minute. In 2015, TRAI had slashed IUC to 14 paise per minute from 20 paise per minute before. Today TRAI has slashed the IUC to 6 paise per minute and it will be 0 from January 1, 2020 onwards.

A subscriber will gain if there is no IUC because of lower tariffs. On the flip side, telecom operators will bleed even more because of lower revenue. Lower revenue will result in lesser importance to R&D in the field of telephony and this will lead to inconvenience for the user.

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