Mobile IUC cut 57 pct, may lead to Rs 4000 cr loss for telcos; here is what TRAI Chairman RS Sharma has to say

By: | Published: October 3, 2017 3:53 AM

Trai chairman RS Sharma tells Rishi Ranjan Kala that the regulator could review the new interconnect usage charge (IUC) after one year of its implementation, that is, by October 2018.

Mobile IUC cut, trai on Mobile IUC cut, mobile termination charge, Bharti, Vodafone, Idea, Trai’s plan for IUC, BAK regime, what is BAK, Calling Party Pays, IUC regulation, Reliance Jio charges, voice consumers, Regulatory Principles of Tariff AssessmentTrai chairman RS Sharma. (Image: IE)

On September 19, the Telecom Regulatory Authority of India (Trai) slashed mobile termination charge by a massive 57% to 6 paise a minute, a move which would render a loss of over Rs 4,000 crore annually to the three big incumbents — Bharti, Vodafone and Idea, while leading to an annual saving of around Rs 5,000 crore to new entrant Reliance Jio. The regulator, for the first time, has also laid out its future course of action by stating that termination rates would become zero (bill and keep in technical parlance) from January 1, 2020. Trai chairman RS Sharma tells Rishi Ranjan Kala that the regulator could review the new interconnect usage charge (IUC) after one year of its implementation, that is, by October 2018.

Don’t you think Trai’s plan to usher in the bill and keep (BAK) regime by 2020 is a bit early, considering that technological changes have become more fast-paced?
Not at all. This exercise to discover the IUC was started last year and was well in time as the last regulation was in March 2015. But having started the consultation, we are duty-bound to discover the actual cost, which should be reimbursed and that computation produced the 6-paise rate. You cannot make it zero because at this point, we have taken the figures of December 2016. We are also clear that this is a road map to nudge the industry towards an all-IP-based network. LTE is the technology of the future.

But what about arriving at the zero rate and BAK regime by 2020?
The path we have given is just a glide path and basically what we have said is that we feel that the networks on a conservative estimate will also become IP-based by end-2019. People have confusion over our approach to the BAK model and that BAK and Calling Party Pays (CPP) are not compatible. But we are not approaching the problem from that angle. We are saying that BAK has two things — bill and keep. Now, what do you bill? You bill what you spend. IUC charges should not be a profit vertical. It should be neither more nor less than what you spend. Therefore, in January 2020, the estimation is that the bill itself will become close to zero and the cost of handling the call will become close to zero. So, once the bill is close to zero, you have no option but to keep it. So, BAK from a technology perspective because this particular thing is approaching zero, that’s the rationale. It is not that CCP and BAK are not compatible. Voice will become merely an application on top of data.

We think that this is a very conservative and safe assumption that by end-2019, things will become all IP-based. At present, around 11% of the networks is IP-based and at this time it will be about more than 15%.

But will you review the new IUC regulation?
We have said after one year of operations of this arrangement, Trai will have a look at it. It is not as if we are saying that 2020 is the final thing. See, in the Telecommunications Interconnection Usage Charges (13th) Regulations, 2017, it is clearly stated that the Authority shall keep a close watch on developments in the sector, particularly with respect to the adoption of new technologies and their impact on termination costs. The Authority, if it deems it necessary, may revisit the scheme of termination charge applicable on mobile-to-mobile calls after one year from the date of implementation of this charge.

Reliance Jio charges customers only for data and not for voice as it is free. But it does not have options for those who only want voice. Don’t you think Trai should ask the operator to also have options for voice consumers?
Tariffs are under forbearance. If they (Jio) were not giving voice, which is one of the conditions of the licence agreement, one could have insisted. I don’t think that should be a limiting factor. It’s a service they are giving and it includes voice. Had they been only offering data and not voice, then there was a case. If there is an offering, which includes voice, there is no problem.

What do you have to say on the recent criticism directed at Trai on the IUC regulation?
One can be an expert in public policy, telecom etc, and it gives one right to comment on issues and make informed and constructive criticism, but it does not give anyone the right to question anybody’s or any institution’s integrity. That’s unfortunate. That’s all I have to say. See, Trai’s DNA is consultation and we are open to criticism and comments. We have given the computations and calculations on IUC in the public domain. One can see that and then comment.

Has Trai filed caveats in all the high courts of the country in anticipation of telecom operators approaching the courts on the IUC regulation?
See, Trai files caveats in a routine manner in courts where it thinks its orders may be challenged. It’s nothing new. I’m not aware as to how many places we have filed (caveats). We have completed this process. It is actually to protect our legal interests and that’s a normal practice which has been followed for long.

What is the status on the consultation on the Regulatory Principles of Tariff Assessment?
I think those principles will be coming up certainly in the second half of next month. We have completed the entire process. It is a very important topic and the regulator has consulted all the stakeholders on this. It will be out very soon.

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