Trai to cut interconnect charge to Rs0.06 from 1 October
27 Sep 2017
The Telecom Regulatory Authority of India is slashing the country's interconnect charge by over 50 per cent from 1 October, and will completely abolish the fee from 1 January 2020, much to the dismay of the older or 'incumbent' telecom service providers.
Trai has spent over a year consulting with operators over potential changes to the mobile-to-mobile termination fee, which will be wound down from Rs0.14 to Rs0.06. However, the decision has been met with anger from several major Indian operators.
Vodafone India's parent firm, the UK's Vodafone Group, last month argued that reducing the fee would provide a disproportionate benefit to newcomer Reliance Jio Infocom. Vodafone described Trai's decision as ''yet another retrograde regulatory measure that will significantly benefit the new entrant alone while adversely affect(ing) the rest of the industry''.
The operator added, ''Unless mitigated, this decision will have serious consequences for investment in rural coverage, undermining the government's vision of a Digital India. We are disappointed with this decision and are now considering our options to respond to it.''
The group's chief executive Vittorio Colao noted that Reliance Jio had been pushing the government to reduce the interconnect fee. He claimed that the fee was already well under the cost of processing incoming calls.
Meanwhile, Singtel, which is the largest single shareholder in market leader Bharti Airtel, had written to the telecom minister prior to Trai's decision arguing that a reduction of the fee was ''likely to have adverse consequences for investment and long-term sustainability of the Indian telecom sector. Ultimately, this would be to the detriment of customers''.
The group's chief executive Chua Sock Koong said that the decision would ''simply mean that there is less revenue available to mobile operators to finance both their existing and future investments''.
Bharti Airtel stated ''the suggested rate, which has been arrived at in a completely non-transparent fashion, benefits only one operator which enjoys a huge traffic asymmetry in its favour. The sharp drop in the rate will only help transfer part of its cost to other operators, thereby further worsening the financial health of the industry.''
Trai claims that the reduced charges will provide greater flexibility in terms of retail prices, which will help consumers. However, the Cellular Operators Association of India said that some of its members were planning legal action against the fee reduction.