Airtel’s Sunil Mittal: Why is Trai even considering bill and keep model?

New Delhi: Sunil Mittal, chairman of India’s largest telecom company Bharti Airtel Ltd, has written to Telecom regulatory Authority of India (Trai) chairman R.S. Sharma saying he is “at a loss as to why Trai should be considering bill and keep model” and break away from the global well-established practice of interconnect usage charge (IUC).

What surprises the most, he wrote in the 24 July letter, is no one has talked about abolishing IUC for international call settlement, which is prevalent across markets.

A copy of the letter has been reviewed by Mint.

In the letter, Mittal said that IUC for a call from India to the US is about 1.2 cents, to Europe about 3-30 cents and to the Middle East about 10-14 cents.

Neighbouring countries such as Bangladesh, Sri Lanka and Nepal charge about 2-13 cents. Similarly, when the calls come into India, Trai has set an IUC to be paid to the mobile operators at 53 paisa and, in turn, the Indian international operator charges approximately 1 cent as IUC for the incoming calls on their network.

“The Trai not even debating this issue, therefore, confirms Authority’s acceptance to the principle that IUC is indeed a settled global practice built on fair and equitable settlements for work done by each operator for carrying each other’s calls,” Mittal said.

“Why should India be any different? It should not be... I am, therefore, at a loss as to why Trai should be considering a bill and keep regime in India as one of the options and break away from the global well-established practice, while at the same time, not disturbing the settled IUC on international calls,” he added.

Mukesh Ambani-controlled Reliance Jio Infocomm Ltd is pressing for the bill-and-keep model, wherein IUC (paid by the telco from which a call originates to the telco which receives the call) will be effectively scrapped.

Rivals Bharti Airtel, Vodafone India Ltd and Idea Cellular Ltd, on the other hand, want these charges raised to at least 30 paise per call from 14 paise now.

Mittal, in his letter, also said that IUC has no relation to customer tariff and, at the same time, it is ensuring investments in networks continue to be made by all operators, and customer calls are satisfactorily completed.

On a net basis, established operators with more users and bigger networks tend to earn more from IUC, while newer and smaller ones find it a burden.

In a presentation to Trai last Tuesday, Reliance Jio claimed India’s top three telcos have generated as much as Rs1.04 trillion in revenue in the past five years on account of non-implementation of a 2011 Trai road map to cut the charges to zero.

Mittal, however, said that the current IUC at 14 paisa is already well below cost and it will be in “fitness of things” that while taking a final decision, the Authority upholds the principle of compensation of work done by each operator and the IUC “is set at costs discovered through a fair and transparent mechanism”.

“BAK should be rejected and India should not be subjected to a regime which is alien to the mobile industry the world over,” he said.