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  1. Reliance Jio, incumbent telcos clash at Trai open house

Reliance Jio, incumbent telcos clash at Trai open house

Incumbent operators like Bharti Airtel, Vodafone, and Idea Cellular on Thursday once again clashed with Reliance Jio over mobile termination charge (MTC) at an open house session convened by the Telecom Regulatory Authority of India.

By: | New Delhi | Published: July 21, 2017 5:47 AM
TRAI, Reliance Jio, Trai chairman R S Sharma, Bharti Airtel, Vodafone, Idea Cellular Trai chairman R S Sharma declined giving a time period within which the regulator will come out with the new IUC regime rates.

Incumbent operators like Bharti Airtel, Vodafone, and Idea Cellular on Thursday once again clashed with Reliance Jio over mobile termination charge (MTC) at an open house session convened by the Telecom Regulatory Authority of India. While both sides reiterated their stand — incumbents for hiking MTC and Jio for making it zero — the incumbents charged Jio for passing its cost on them to make its voice services free.

In a statement, Bharti said that by proposing a transition to bill and keep (BAK) with zero MTC, Jio wants to transfer its cost to other operators, which as per current estimates is to the tune of `15,000–20,000 crore annually and will increase going forward. It also said that barring four countries, the calling party pays (CPP) regime is the globally accepted norm. In the four countries where MTC is zero, the customer pays for incoming calls. “However, nowhere in the world do we have a situation where incoming calls are free and MTC is also zero,” it added.
During the discussion, the incumbent operators said that MTC should be based on the cost of the network on which the calls are coming. They also stressed that while deciding on IUC, the critical element of traffic symmetry should also be addressed.

Attacking the BAK model, the incumbents said that it does not address the issue of asymmetric traffic, which is impacting their operations post Jio’s launch. Besides, under the BAK the best network becomes an incoming call network.

The incumbents also said that scrapping IUC will impact the coverage in rural areas as the customers there usually have low paying capacity, which is reflected in low Arpus. Also incoming calls far exceed outgoing calls in such areas. IUC helps operators even out losses. Besides, around 40-50% of the subscribers of the top operators are in the rural areas, hence analysing the coverage based only on geographical area is not a valid argument.

Reliance Jio retaliated saying that using traffic asymmetry is like penalising an operator who has invested on more efficient technology. Traffic asymmetry will occur when a new operator comes into the market, however as the system matures, this asymmetry minimises.

It also said that all the major telecom operators are in the process of launching VoLTE, under  which the cost of providing a call is around 0.7-0.8 paise, then why should the charges be based on an old technology. The new entrant countered that despite high IUC rates in the last 15 years, rural penetration is just around 55%.

The session also saw participation from Member of Parliament (MPs) Ninong Ering, Prem Singh Chandumajra and YV Subba Reddy from Lok Sabha as well as Majeed Memon and Sukhendu Sekhar Roy from Rajya Sabha. All the MPs advocated the BAK model and scrapping of the charge in favour of the consumers.

Bharti, in its statement also countered allegations made by Jio regarding the country’s largest telecom operator earning excess revenue from MTC as “false and laughable”.

It said that Trai’s mandated MTC of 14 paisa is well below the cost of producing a minute, which is currently at 35 paise. In fact, with the tsunami of calls originating from Jio’s network, Bharti loses 21 paisa for every minute that is carried on its network. This has resulted in a loss of `550 crore per quarter for Bharti alone.

“At the same time, it allows Jio to continue with its strategy of predatory pricing and ultimately throttle all competition. This is the sinister design of Jio. The question to ask is does India want a monopoly situation in telecom?,” Bharti’s chief regulatory officer Ravi Gandhi said.

Speaking to reporters after the session, Trai chairman R S Sharma declined giving a time period within which the regulator will come out with the new IUC regime rates.

“We have had a consultation paper, we had comments, counter comments, a workshop day before yesterday and today we had this OHD. We will take all these inputs into account to come to a conclusion. It will take some time. This process was started almost a year back,” he said adding that the Authority will not hold anymore consultations on IUC.

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