Incumbents reiterate demand during meeting with Trai, new entrant Jio pitches for BAK model.
Incumbent operators like Bharti Airtel, Vodafone India and Idea Cellular on Tuesday pitched for more than doubling of the interconnect usage charges (IUC) from the current 14 paise per minute. But Reliance Jio opposed it and instead proposed bill and keep model, which means zero charge.
The demand by the incumbents was reiterated at a meeting held by Telecom Regulatory Authority of India (Trai), which is in the process of reviewing the IUC charges. While Bharti and Idea pressed for a 30 paise per minute charge, Vodafone made a case for 40 paise per minute.
The reason for these companies asking for a higher IUC, which is basically termination rates, is because they feel that the present one is not cost-based which is benefiting Jio which is choking their networks by landing a large number of free calls.
Termination charge is paid to the network operator on whose network calls terminate by the network from which the call originates. Since 92% of calls are outgoing from Jio’s network to those of incumbents, the latter feels that if charges are raised to reflect the true cost, Jio would price its voice calls which is free right now.
Jio said its cost of operations is almost zero (0.8 paise) and pitched for the Bill And Keep (BAK) model, which it said is a “progressive” and “forward looking” model.
Trai is currently reviewing the IUC regime. Last time in March 2015, when the termination charge was reviewed under the Telecommunication Interconnection Usage Charges (11th Amendment) Regulations, 2015, the regulator had indicated that the termination charges would be reviewed after a two year period.
In 2015, Trai brought down the mobile termination charges to 14 paise per minute from 20 paise per minute fixed in 2009 and scrapped fees for calls made to and from landlines to zero. Before 2009, the IUC for a mobile-to-mobile call was 30 paise a minute.
Slashing IUC rates will impact the revenues of the telecom operators who are already facing a tough time following the launch of Jio, which has seen the industry revenue decline for the first time in the last 20 years.
The government has appointed an inter-ministerial group (IMG) to look into the financial headwinds faced by the sector and suggest reform measures. The panel is expected to be submit its report this month.