1. Big setback for Vodafone India, Delhi HC junks plea for Trai to disclose IUC charges methodology

Big setback for Vodafone India, Delhi HC junks plea for Trai to disclose IUC charges methodology

In a major setback for Vodafone India, the Delhi High Court on Monday dismissed its petition that urged for directions to the Telecom Regulatory Authority of India to disclose its methodology for calculating the interconnect user charge (IUC).

By: | New Delhi | Published: September 5, 2017 6:02 AM
 Vodafone India, Delhi High Court, TRAI Though the petition was filed by Vodafone, the HC dismissal is also a setback for other incumbents like Bharti Airtel and Idea Cellular. (Reuters)

In a major setback for Vodafone India, the Delhi High Court on Monday dismissed its petition that urged for directions to the Telecom Regulatory Authority of India to disclose its methodology for calculating the interconnect user charge (IUC). Though the petition was filed by Vodafone, the HC dismissal is also a setback for other incumbents like Bharti Airtel and Idea Cellular. This is because the telecom industry body, Cellular Operators’ Association of India in which the three have majority, had earlier urged Trai to disclose the methodology for the sake of transparency and fair play but the regulator had rejected the plea.

With the dismissal, Trai can go ahead and come out with its regulations on IUC for which it has conducted all the required consultative process. However, the telcos would be free to approach the court once the regulation comes. It is widely expected that the mobile termination charge under IUC would come down to below10 paise per minute from the current 14 paise. Termination charge is paid to the operator on whose network the call terminates by the originating network.

This charge has been on a declining trend for the last several years. However, the entry of Reliance Jio last year and its free services led to asymmetric calls — around 92% calls from Jio terminate on the networks of incumbents while only 8% calls of the latter terminate on Jio’s networks.

This has led to demands by the incumbents to raise the termination charge as it is below cost, which has led Jio to choke their networks. If the charges are hiked, incumbents would get more as termination rate from Jio and they feel this would act as a deterrent for Jio to continue with free calls. However, if the charges are lowered it would be beneficial for Jio as its outgo towards termination would get reduced.

While incumbents have pitched for higher, cost-based termination charge of around 30 paise per minute, Jio has advocated zero rate which is called bill and keep (BAK).
The issue has assumed great significance with Bharti chairman Sunil Mittal, Aditya Birla Group chairman (owners of Idea) Kumar Mangalam Birla and global CEO of Vodafone Vittorio Colao writing to Trai chairman RS Sharma and telecom minister Manoj Sinha against the BAK model.

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