One of our competitors has imposed a rate of 6 paise for all off net calls made to other operators to cover the termination charge of IUC (Interconnect Usage Charge). They have gone on to suggest that TRAI has re-opened this issue.
We would like to point out that, on 19th September, 2017, when TRAI reduced the IUC from 14 paise to 6 paise and proposed a move towards Bill and Keep (zero IUC) with effect from Jan 1, 2020 they had specifically mentioned the following:
“The Authority shall keep a close watch on developments in the sector particularly with respect to the adoption of new technologies and their impact on Termination cost. The Authority, if deems it necessary may re visit the afore mentioned scheme of Termination charge applicable on Wireless to Wireless calls after one year from the implementation of the regulation”
The assumptions made by TRAI were to evaluate two factors: One was the adoption of VoLTE, which TRAI assumed will bring the cost down. Second, with the growth of smaller sized operators, symmetry of traffic would ensue. Both these have not materialized. There are still over 400 million 2G customers from the poorest sections of society living in rural areas paying less than Rs 50 per month and who can still not afford to buy a 4G device. Second, there still is significant asymmetry of traffic.
In line with TRAI’s stated position, therefore, they have issued a consultation paper in September 2019 to reassess the time lines of the shift from 6 paise to a zero charge.
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.
The telecom industry is in a state of deep financial stress since the last three years with several operators having gone bankrupt and thousands of jobs having being lost. The IUC is determined based on the cost per call. Given the massive 2G customer base in India the cost of the call at 6 paise is already significantly below the real cost of completing the call.