More reports on: Telecom

Reliance Jio seeks end to interconnection charges, others want it doubled

19 July 2017

Reliance Jio has sought an end to interconnection user charges (IUC), or call termination charges, even as established airlines have demanded doubling of the fee, opening a new front in the ongoing war with the newcomer and entrenched interests.

At a workshop held by the Telecom Regulatory Authority of India (Trai) on Tuesday, Reliance Jio officials have proposed scrapping of the interconnection user charges (IUC), while Bharti Airtel Ltd, Idea Cellular Ltd and Vodafone India Ltd sought to double these.

This is because, bigger networks like Airtel, Vodafone and Idea with more users earn more from interconnection charges on a net basis while newcomers like Reliance Jio with smaller customer base end up paying more.

For every mobile phone call, the telecom firm that originates the call pays 14 paise to the one which receives the call, called interconnection user charges.

This rakes in more revenues to established telcos as customers prefer to make calls from zero tariff Jio to other networks rather than the other way round, increasing the burden on Jio. It's double loss for Jio as on a net basis it ends up paying to established operators for the free calls it offer to customers.

Reliance Jio has now proposed zero IUC charges. Other smaller operators also maintained that Trai should not change IUC charges.

On the other hand, the three telecom majors wanted the charges to be more than raised to 30 paise. They also are reported to have presented their cost structures to press for a hike in IUC to at least 30 paise, reports quoting sources present at the meeting said.

Jio said its cost of servicing a call is next to zero and hence it proposed a so-called ''bill and keep'' model, in which companies only keep a record of incoming calls on their network but don't raise any demand from other operators.

The top three telecom firms are of the view that interconnection capacities provided by one telecom firm to another involve costs, for which a company should be fairly compensated. Reducing IUC will dent their revenues, but will also bring down call charges.

''Some operators said reduce the charges, some said increase them, some also requested to maintain it at current levels,'' Trai chairman RS Sharma said in an interview. He did not reveal any more details.

Trai will hold an open house discussion on the issue on Thursday, before examining the companies' cost structures to arrive at a decision.

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