TRAI cuts Interconnection Usage Charges to 6 paise, will scrap charges from 2020

The Telecom Regulatory Authority of India (TRAI) has revised interconnection usage charges (IUC) after over 2 years. It has further reduced mobile to mobile to 6 paise per minute from 14 paise per minute from 2015. This comes after an open-house held by TRAI in July regarding interconnection usage charges (IUC) where Reliance Jio proposed to make IUC zero, while incumbents such as Airtel, Idea Cellular and Vodafone India were against it, demanding for IUC to be raised to 30-40 paise per minute.

TRAI also said that the 6 paise per minute IUC will come into effect  from the 1st October, 2017 to the 31st December, 2019 and it will be scrapped effect from the 1st January, 2020. For other types of calls (such as wire-line to mobile, wire-line to wireline and mobile to wire-line) the termination charge would continue to remain zero.

TRAI says that it examined that when clear demonstrable large difference exist in the cost of providing same services, why TSPs are not migrating to newer technologies such as VoLTE. It said that termination charges
work as disincentive to deployment of new technologies such as VoLTE and migration to IP networks by operators.

It also said that moving towards Bill and Keep (BAK) regime will encourage adoption of latest technologies and the deployment of IP-based telecom networks. “Since IP based networks are poised to be the networks of the future for providing telecom services, a BAK regime should be seen as a natural facilitator for the development of technology,” it added.

Regarding reduction of termination charges, TRAI in a statement, said:

The reduction of mobile termination charges from Re. 0.14 per minute to Re. 0.06 per minute w.e.f 01.10.2017 will amount to a reduction of about 57%. Such a revision in the mobile termination charge is in line with the international trends.

The reduction in the mobile termination charge is likely to yield consumer benefits. As described in the Consultation Paper on ‘Review of Interconnection Usage Charges’ dated 05.08.2016, the average outgo per outgoing voice minute declined from Re. 0.50 per minute (in quarter ending March 2015) to Re. 0.31 per minute ( in quarter ending March, 2017) after the implementation of the Interconnection Usage Charges (11th Amendment) Regulations, 2015 w.e.f. 01.03.2015 through which mobile termination charge were reduced from Re. 0.20 per minute to Re. 0.14 per minute.

Vodafone said that it is disappointed with the move by TRAI, regarding this Vodafone spokesperson said:

We are disappointed with this decision and are now considering our options in response to it. The Indian telecoms industry is already experiencing the greatest period of financial stress in its history. This is yet another retrograde regulatory measure that will significantly benefit the new entrant alone while adversely affecting the rest of the industry as a whole. Unless mitigated, this decision will have serious consequences for investment in rural coverage, undermining the Government’s vision of Digital India.

Airtel said that it is dismayed by this decision, regarding TRAI’s move, it said:

We are extremely disappointed with the latest regulation on the IUC, especially at a time when the industry is facing severe financial stress. The suggested IUC 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 IUC rate will only help transfer part of its cost to other operators, thereby further worsening the financial health of the industry. As part of an industry, which continues to be a critical driving force behind the economic growth in the country, we are genuinely dismayed by this decision.

Author: Srivatsan Sridhar

Srivatsan Sridhar is a Mobile Technology Enthusiast who is passionate about Mobile phones and Mobile apps. He uses the phones he reviews as his main phone. You can follow him on Twitter and Instagram