Incumbents’ loss is Jio’s gain
The telecom regulator has opted for the Bill and Keep (BAK) model for interconnection usage charges (IUC) – which one operator pays to the other for call termination. By 2020, the telecom regulatory authority of India (TRAI) will phase out domestic call termination charges on mobile to mobile calls. It has brought down the IUC to 6 paise from 14 paise per minute, from October 1. At one stroke, the TRAI ruling on interconnection has facilitated savings of ₹5,000 crore to Reliance Jio and loss of revenue for the incumbents of approximately ₹3,500 crore. The move, say telecom experts, would further lower the incumbents’ capacity to invest in the network. The incumbents including Airtel and Vodafone-idea are already bleeding with the aggressive offerings by Jio. The Cellular Operators Association of India (COAI) has called the interconnect regulation disastrous and has decided to go to the court.