Home / Industry / Telecom /  Concept of interconnect usage charge is outdated: Jio

Interconnect usage charge (IUC) is an obsolete concept which relates to 2G networks, and telecom operators must invest in 4G networks given the rising digital connectivity, Mathew Oommen, President-Networks, Reliance Jio, said on Tuesday.

“The concept of point of interconnect and concept of interconnect (usage charge) is related to 2G. It’s outdated. If you don’t invest the industry will become obsolete," he said at the sidelines of a session at the India Mobile Congress on Tuesday.

His statement comes at a time when a fresh war of words has erupted between Bharti Airtel and Jio after the latter said it will start charging for calls made to rival networks at 6 paise a minute, reneging on a promise to keep voice calls free for its customers.

Jio last week said it “had been compelled most reluctantly and unavoidably" to do this following the decision of the Telecom Regulatory Authority of India (Trai) to review the date for scrapping interconnect usage charge (IUC) from 1 January 2020, which has led to regulatory uncertainty.

Bharti Airtel CEO Gopal Vittal on Tuesday said IUC was in fact a settlement between operators and had nothing to do with tariffs.

“The industry has in the last 20 years absorbed the IUC," Vittal said.

Jio’s move to charge for calls came three weeks after Trai on 18 September floated a fresh consultation paper to see if there is a need to revise the applicable date for scrapping IUC, given the continuing imbalance in inter-operator traffic.

IUC, which has been set at 6 paise a minute, is levied by mobile networks handling incoming calls from rival networks.

Scrapping IUC or reducing it would benefit an operator with more outgoing traffic than incoming calls.

As of June-end, 64% of Jio’s total traffic was outgoing.

Bharti Airtel and Vodafone Idea would stand to gain if Trai decides to postpone the date of scrapping IUC as these telecom operators get more incoming calls than outgoing.

Immediately after Jio’s announcement to charge for calls, Bharti Airtel, without naming Jio, said one of its competitors suggested that Trai reopen this issue, while the regulator had in September 2017 already said it might undertake an exercise to revisit the matter at a later date.

“Clearly, this off net charge being levied, therefore, is to force IUC to be brought down despite the heavy burden it puts in the receiving network. We are grateful that this very timely consultation paper to reassess IUC has been issued by Trai," Airtel had then said.

Meanwhile, Jio has said these charges will only continue till the time the regulator abolishes IUC.

“The concept of temporary, fixed etc is driven by the industry," Oommen said on a question on whether Jio’s move to charge 6 paise a minute for calls was temporary.

“This is something that the industry, the regulator, and the whole framework have to do together to decide when we move down from 2G to 4G rather than deliberating now about 5G because if you don’t have the baseline of all IT and all VoLTE, I’m not sure how you will do 5G," he said.

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