Interconnection usage charges revision will hit investments, say telcos

Telecom firms favour a cost-based calculation of termination charges that will allow operators to charge each other for ending calls on their network


Reliance Jio Infocomm Ltd, which is yet to start commercial services, has proposed the ‘bill and keep’ model. Photo: Aniruddha Chowdhury/Mint
Reliance Jio Infocomm Ltd, which is yet to start commercial services, has proposed the ‘bill and keep’ model. Photo: Aniruddha Chowdhury/Mint

New Delhi: Bharti Airtel Ltd, Vodafone India Ltd and other telecom operators have opposed an immediate review of interconnection usage charges (IUC), claiming it will affect investments, and has asked the regulator to postpone it by at least six months.

The incumbent telecom operators favour a cost-based calculation of termination charges that will allow operators to charge each other for ending calls on their network.

In contrast, Reliance Jio Infocomm Ltd, which is yet to start commercial services, has proposed the ‘bill and keep’ model, in which companies recover interconnection costs from their own users and in effect does away with interconnection charges. The operators were responding to a consultation paper floated by the Telecom Regulatory Authority of India on 5 August.

Bharti Airtel said interconnection capacities provided by one telco to another involve costs for which a company should be fairly compensated.

Even as the total number of incoming and outgoing calls are same at industry level, Bharti Airtel said, “a below-cost termination charge certainly results in lesser share of revenue for an operator serving more number of incoming calls than the operator serving more number of outgoing calls.”

Vodafone India and Idea Cellular Ltd also reiterated their support for cost-based termination charges, saying such a regime allows firms to invest more to expand networks. The leading telcos called the consultations on interconnection charges by Trai untimely and premature. Opposing the ‘bill and keep model’, Idea Cellular said: “Reduction in IUC does not reduce cost for telecom industry. IUC in reality is only a settlement between operators for using each other’s networks.” Idea also said Trai is oblivious to the global experience on mobile termination charges.

In 2015, Trai said it would review termination charges regime in fiscal 2018; however, the authority floated a consultation paper in August this year to review the interconnection charges, suggesting a reduction in the same. The paper has become controversial and has become another issue of contention between Reliance Jio and incumbent telecom operators.

Vodafone India said the calling-party pays regime is an intrinsic part of IUC regime and “any change from a cost-based regime will adversely impact our huge investments in rural areas and bely the promise of cost-based approach on the basis of which these investments have been made”.

As per calling-party pays regime, the firm making outgoing calls pays the operator receiving calls on their network. According to the current IUC regulation, an operator is liable to pay Re0.14 to the operator on whose network the call is terminated.

RJio and incumbent operators are also sparring with each other over points of interconnection (PoI), which enable calls to flow from a network of one operator to another. RJio has alleged India’s top three operators—Bharti Airtel, Vodafone India and Idea Cellular—have not released adequate PoIs, resulting in call failures.

Last week, RJio said the call failure rate was as high as 63% on Vodafone’s network, 44% on Idea’s and 29% on Bharti Airtel’s network.

In their defence, the telecom firms have been arguing they have released adequate PoIs and the asymmetric traffic along with RJio’s issues with its own network are the causes of call failure.

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