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What is interconnection usage charge?

What is interconnection usage charge (IUC) in telecom?

These charges are paid by a telecom services provider whose subscriber makes a call to the service provider whose subscriber receives the call. IUCs (termination, origination and transit charges), directly impact the call tariff.

The Telecom Regulatory Authority of India (TRAI) terms interconnection as the “lifeline of telecommunications” as it allows subscribers of one network to seamlessly communicate with those of another network or access the services offered by other networks.

Why is it in the news?

Recently, TRAI came out with ‘Telecommunication Interconnection Usage Charges (Thirteenth Amendment) Regulations’ wherein it directed slashing mobile termination charges by 57% from 14 paise to 6 paise per minute from October 1, and completely doing away with these charges from January 1, 2020.

What is the controversy?

The decision follows a prolonged battle between the Mukesh Ambani-led Reliance Jio and the top three telcos, Airtel, Vodafone and Idea. While the top operators had pitched for doubling the mobile termination charges to over 30 paise “to recover their cost,” the newer rival had suggested zero charges and shifting to the bill-and-keep regime, under which operators bill their own subscribers for outgoing calls and keep the revenue received. They do not pay any termination charges to each other.

The two sides have been involved in a war of words over the issue. The industry anticipates that TRAI’s decision to cut IUC and gradually do away with it will lead to a loss of over ₹5,000 crore annually to the three big incumbents, while resulting in an annual saving of around the same amount to Reliance Jio.

What has TRAI reasoned?

Among other things, it says that the reduction in MTC is likely to yield consumer benefits. The regulator has said that the average outgo per outgoing voice minute declined from 50 paise/minute in January-March 2015 to 31 paise/minute in January-March 2017, after the MTC was cut to 14 paise/minute from 20 paise/minute from March 1, 2015.

It adds that these charges work as a disincentive for deployment of new technologies such as VoLTE, or Voice over Long-Term Evolution, and migration to Internet Protocol networks by operators, wherein there are no interconnection charges.

TRAI points out that the cost of voice turns out to be fraction of a paisa/minute on over-the-top applications such as Skype or WhatsApp and it will be virtually impossible for a telecom service provider to compete against these if additional cost in the form of MTC is imposed.

What happens next?

The top telcos — who have alleged that the new rate has been arrived at in a “completely non-transparent fashion and benefits only one operator which enjoys a huge traffic asymmetry in its favour” — are likely to challenge the regulation in court. However, TRAI Chairman R.S. Sharma denies these allegations, says that the rate has been calculated in a transparent manner, and that the regulator will defend itself in court if challenged.

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Printable version | Mar 9, 2021 11:33:25 AM | https://www.thehindu.com/opinion/op-ed/the-telecom-battle-lines/article19797708.ece

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