Business Companies 21 Sep 2017 Gainers and losers o ...

Gainers and losers of Trai cutting interconnect user charges to 6 paise

DECCAN CHRONICLE.
Published Sep 21, 2017, 2:15 pm IST
Updated Sep 21, 2017, 2:38 pm IST
IUC was 30 paise per minute in 2004 which was brought down to 20 paise in 2009 and 14 paise in 2015.
TRAI more than halves interconnection user charges or IUC from 14 paise to 6 paise. (Photo: Representational)
 TRAI more than halves interconnection user charges or IUC from 14 paise to 6 paise. (Photo: Representational)

Mumbai: Telecom sector regulator Trai on Wednesday more than halved interconnect user charges (IUC) or call termination fee to 6 paise from the earlier 14 paise, overlooking concerns raised by Bharti Airtel, Vodafone and Idea Cellular -- the incumbent telecom operators who claim they will emerge as biggest losers of the decision. The three companies had wanted IUC be raised to 30-35 paise, which is the actual cost of receiving, connecting and ending a call on destination network, according to them.

IUC is the cost that a destination network incurs for receiving or connecting and then ending a voice call made from a source network. IUC is paid by the source network of a voice call. This is not the first time that IUC has been cut. In 2004, the call termination charge per minute was 30 paise which was brought down to 20 paise in 2009. It was again cut and was fixed at 14 paise per minute in 2015.

 

According to a report in The Economic Times, a 'Calling Party Pays' rule was introduced by India's telecom authorities in January 2003 under which it was decided that the source network will pay for the call. It also specified that incoming calls will not be charged. It stipulated only IUC would be charged.

The telecom trio argues in its favour since Jio's entry with free voice calling services, the number of outgoing calls made from their networks has come down substantially. On the contrary, as Jio offers free outgoing calls on its VoLTE technology, the number of outgoing calls from Jio to other networks has gone up significantly.  Which means Jio would be the biggest gainer of the new ruling. Jio says these companies also making profits but they are not showing it.

 

The three existing telecom companies also allege Reliance Jio will be the biggest beneficiary of Trai's Wednesday's ruling fixing a much lower call connecting and ending charges as the new entrant to the sector has disrupted the market. Jio has eaten into the revenues of these telecom operators by offering free life-time voice calling facility and dirt cheap data packs, they allege.

However, Reliance Jio strongly denies these allegations. Jio blames business model adopted by these companies for their dwindling profits and huge revenue loss. Jio has even raised its own concerns with telecom authorities. It has petitioned Trai claiming that Bharti Airtel made huge gains but it is hiding it and also misleading on its revenue and profit numbers.

 

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