April 23, 2018

Trai cuts termination charge on mobile voice calls; Reliance Jio to gain

20 September 2017, 01:07 | Francis Delgado

Telecom operators to seek legal help against TRAI's IUC slashing

Reliance Jio Trai Vodafone Idea Airtel Ambani

"We strongly believe that introducing a BAK (Bill and Keep) regime or reducing IUC in India is likely to have adverse consequences for investment and the long-term sustainability of Indias telecommunications sector", SingTel Group Chief Executive Officer Chua Sock Koong said in a letter dated September 11. ".if you reduce the termination charge, the principal beneficiary is Jio because they are the ones dumping traffic onto other networks". It is a negative for incumbent operators like Bharti Airtel and Vodafone because being bigger operators a large chuck of calls will be terminating on the networks of Bharti Airtel and Vodafone.

Late Tuesday, the Telecom Regulatory Authority of India lowered the interconnect usage charge, paid by the mobile operator originating a call to the network where it is received, to 6 paise a minute effective October 1 and made a decision to scrap the charge from January 1, 2020. The older telecom players wanted it raised to at least 30 paise per minute. The latest notification by TRAI has mentioned that the rate will be reduced to 6 paise/minute starting October 1 and it will be completely scrapped from January 1st, 2020.

"Whatever the Trai does, another court battle is on the cards".

Jio, on the other hand, wanted IUC to be waived, saying it will benefit consumers. It is paid to the telecom operator who receives the call.

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TOI was the first to report on the impending cut in IUC charges in its edition dated August 13. Telecom operators levy IUC on incoming calls from other networks and the charges are passed on to subscribers.

In today's statement, TRAI also stated that the new rates will allow the telecom operators to offer better call rates and packages to the customers and that will eventually increase the mobile usage among the lower income families.

"Lower termination charges are, therefore, likely to benefit consumers overall (both fixed and mobile) because operators will have greater retail pricing flexibility".

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