The case for reducing IUC in the telecom sector
The objectives of competition and efficiency will be best served by aligning interconnect usage charges (IUC) with marginal cost recovery
One of the main fronts in the ongoing war for market share in the telecom sector is interconnect usage charges (IUC). While all the incumbents are supporting a rise in IUC rates, the new giant entrant, Reliance Jio, has backed a reduction. IUC is a charge telco A pays to telco B, to enable B’s customer who is the receiver of a call from A’s network. The argument is that B has invested in the network to receive the call, and should be paid for it accordingly. This is regulated by the Telecom Regulatory Authority of India (Trai) since monopoly power can be exercised by B since B’s customer is bound to B’s network.