Reliance Jio has approached the Telecom Regulatory Authority of India (Trai) stating that Bharti Airtel is trying to “distort” facts to influence the consultation process on interconnect usage charge (IUC) to hide “ill-gotten profits” that it has made by overcharging customers.
Reliance Jio has approached the Telecom Regulatory Authority of India (Trai) stating that Bharti Airtel is trying to “distort” facts to influence the consultation process on interconnect usage charge (IUC) to hide “ill-gotten profits” that it has made by overcharging customers. Contending that Bharti has made “malicious” and “false representation” against Jio, it has said in a letter to Trai chairman RS Sharma on Monday that the country’s largest telecom operator is indulging in “misrepresentation of facts and wrong interpretation of data has been carried out purposefully to create a smoke screen to hide its ill-gotten profits and to support its false pretence of loss under the existing IUC regime”. Jio has countered that Bharti is trying to “confuse” the issue of IUC by providing “distorted” facts in a bid to influence the present consultation process on mobile termination charges (MTC). The response comes a week after Bharti wrote to Sharma refuting Jio’s claims that incumbent telecom operators pocketed Rs 1 lakh crore in last five years due to the non-implementation of Trai’s report on IUC that had talked about moving to a bill and keep the BAK regime, and stated that Jio is “misleading” the authority and the public by “maligning” its competitors.
Bharti also said it has suffered a loss of over Rs 6,800 crore in the last five years, beginning FY13, due to lower IUC. In its letter to Sharma, Jio said, “Airtel, in its submission, has deliberately ignored the fact that its payout towards IUC is recovered by it from its customers, as evident from its retail voice tariff. Airtel’s outgoing tariffs for off-net calls clearly shows a premium that it charges from its customers to compensate for the IUC that it would pay to other operators. It does not charge the same amount for on-net calls,” Jio added.
Supporting its charge of incumbents pocketing Rs 1 lakh crore in last 5 years, Jio said it has considered the gross amount of recovery from off-net incoming minutes and the amount of IUC deemed receivable for on-net incoming calls on the network. Besides, operators do not disclose the data related to IUC receipts and hence calculations have been made on excess recovery based on “certain assumptions” and “disclosures” made by Bharti as part of its financial results.
On Bharti stating that it has suffered a loss in last 5 years, Jio said the telco’s representation is “grossly incorrect and fallacious”. Jio said Trai in its affidavit before the Supreme Court in 2011 said an MTC of 10 paise per minute should be made applicable from 2012 with progressive reduction to zero charges (BAK regime) from 2014. “Accordingly, we have reflected extra recovery of IUC made by incumbent operators at the cost of consumers and smaller operators in excess of Rs 1 lakh crore in terms of gross IUC receipts,” it added.
Bharti has said the termination cost of 30 paise per minute has been calculated on the basis of fully allocated cost (FAC) methodology (including capex), which the regulator has “never accepted”, and in the last IUC regulations (in 2015), Trai had indicated that there is no case for considering FAC, Jio said. “Furthermore, FAC models are inefficient, costly and non-transparent and have been abandoned world over, therefore, all the calculations submitted based on the FAC model merit no consideration,” it explained.