Jio to charge 6 paise/minute on calls to other service providers

10 Oct 2019

Reliance Jio Infocomm on Wednesday said it would start recovering the 6 paise per minute interconnect charges it currently pays to other mobile phone service providers till such time the Telecom Regulatory Authority of India (Trai) effectively bans Interconnect Usage Charge (IUC) for domestic mobile phone calls.

Jio said it continued to pay IUC from its own resources to Airtel and Vodafone-Idea etc while offering free voice to its customers, relying on the repeated stance of Trai and the amendment already made to the regulations reducing the IUC to zero.

However, other telecom operators continue to charge IUC on its customers. This, according to Jio, has brought a Rs13,500-crore burden on the company over the last three years by way of NET IUC charges paid to the other operators.

Interconnect Usage Charge or IUC is a cost paid by one mobile telecom operator to another, when its customers make outgoing mobile calls to the other operator’s customers. These calls between two different networks are known as mobile offnet calls. IUC charges are fixed by Telecom Regulatory Authority of India (Trai) and are currently at 6 paise per minute.

Trai, has repeatedly since 2011, affirmed its stance that the IUC charges should be brought down to zero. In an affidavit files with the Supreme Court on 29 October 2011, Trai stated its opinion that termination charge should be made zero by 2014. That, Jio stated, however, was at a time when neither 4G nor Jio existed.

After a comprehensive review of the IUC regime through a transparent and elaborate consultation process in 2016, Trai issued the Telecommunication Interconnection Usage Charges (Thirteenth Amendment) Regulations, 2017 (placed before the Parliament of India) , which suggested a Re 0.06 (six paise) per minute with effect from 1 October 2017 to 31 December 2019; and zero with effect from 1 January 2020, Jio points out.

This means that IUC for mobile calls that was reduced from 14 paise per minute to 6 paise per minute from 1 October 2017 will be zero from 1 January 2020.

Further, Trai is of the view that termination charges work as disincentive to deployment of new technologies such as VoLTE and migration to IP networks by operators.

The BAK regime would encourage operators to invest in new technology and bring down the cost of voice services close to nil. (BAK – Bill and Keep means zero termination charge)

According to Jio, BAK will be a catalyst for traffic symmetry. It gives TSPs appropriate incentives to serve their customers efficiently and brings market discipline to competition.…. “Evidently, the demand for cost-based IUC till there is traffic symmetry is a vicious circle. Only by removing the cost based IUC, this vicious circle can be broken.”

In order to provide regulatory predictability and enable service providers to plan their networks and businesses accordingly, Trai has prescribed a Bill and Keep regime for the wireless to wireless calls effective from the 1 January 2020.

Accordingly, Trai is of the view that in case the present regime of cost-based domestic termination charge is continued for long, it would hamper the movement of the sector towards (i) deployment of more efficient technologies; and (ii) more innovative and customer friendly tariff offerings; and, in turn, it would be detrimental to the growth of telecommunication services sector. …”

This, according to Jio, has imposed a Rs13,500-crore burden on the company over the last three years by way of NET IUC charges paid to the other operators.

Unfortunately, after the amended order of Trai in 2017, while the incumbent operators reduced voice tariffs for their 4G customers, they continued to charge exorbitant tariffs to their 350-400 million 2G customers, and in fact increased the tariffs for voice calls to around Rs1.50/ minute. They also charge a minimum of Rs500 / GB for data from their 2G customers.

The price differential of free voice on Jio network and exorbitantly high tariffs on 2G networks causes the 350 – 400 million 2G customers of Airtel and Vodafone-Idea to give missed calls to Jio customers. Jio network receives 250 to 300 million missed calls on a daily basis, Jio pointed out.

“This huge missed call phenomena converts the incoming calls to Jio into outgoing calls from Jio to other operators. The 250 to 300 million missed calls per day should have resulted in 650 to 750 million minutes of incoming traffic to Jio. Instead, the call back made by the Jio customers results in 650 to 750 million minutes of outgoing traffic.”

But for the effects of the tariff differential, especially the missed call phenomenon, the off-net voice traffic is already symmetrical now for Jio. It is being made asymmetric by the other operators by keeping their 2G voice tariffs high.

Citing such traffic asymmetry as the only ground in the recently floated consultation paper, Trai has reopened the closed chapter on IUC, which has already been made zero with effect from 1 January 2020 by amendment to IUC Regulations.

“The amendment to the IUC Regulations in 2017 was after considerable deliberations and consultations. In this background the consultation paper has created regulatory uncertainty and therefore Jio has been compelled, most reluctantly and unavoidably, to recover this regulatory charge of 6 paise per minute for all off-net mobile voice calls so long as IUC charges exist,”the company stated.

So, for all recharges done by Jio customers starting today, calls made to other mobile operators will be charged at the prevailing IUC rate of 6 paise per minute through IUC top-up vouchers till such time that Trai moves to zero termination charge regime. At present, this date is 1 January 2020.

Nevertheless, Jio said it is firm on its commitment to offer the highest value to its customers, and there is no 6 paise per minute charge on:

(a) all Jio to Jio calls;

(b) all incoming calls;

(d) calls made using WhatsApp or FaceTime and similar platforms.

Additionally, Jio, with Reliance Retail, will ensure priority allocation of the JioPhone to frequently called 2G users from our Jio consumers.

Jio will provide additional data entitlement of equivalent value based on IUC top-up voucher consumption. This will ensure no increase in tariff for customers.

Jio, however, emphasised that the 6 paise per minute charge on outgoing off-net mobile calls shall continue only till the time Trai abolishes IUC, in line with its present regulation. “We will share all data with Trai to convince that zero IUC regime is in the best interest of consumers and how the huge number of missed calls is creating the wrong perception of asymmetric traffic.”