Airtel wants IUC to stay for 3 years, Jio wants it scrapped
More cracks have emerged in the already divided telecom sector with Reliance Jio Infocomm Ltd in favour of scrapping interconnect usage charge (IUC) from next year, while Bharti Airtel, Vodafone Idea and Bharat Sanchar Nigam Ltd, or BSNL, opposing the move.
The Telecom Regulatory Authority of India (Trai) had recently floated a fresh consultation paper to see if there was a need to revise the date for scrapping IUC from January 1, 2020, given the continuing imbalance in inter-operator traffic.
Airtel and Vodafone Idea, which are currently battling shrinking revenue, thanks to Jio’s cut-throat tariffs, have welcomed Trai’s regulatory rethink.
Jio, however, said it believes this rethink to scrap IUC was unwarranted, arbitrary and antipoor, and not only affects the credibility of the authority, but also sabotages the government’s Digital India mission.
“We firmly recommend that the applicable date for Bill and Keep regime be moved by at least three years,” Airtel said in its comments on Trai’s consultation paper.
Under the Bill and Keep regime, operators do not pay any charge to each other for receiving calls on their network. Simply put, Bill and Keep means scrapping IUC.
IUC, at 6 paise per minute, is levied by mobile networks handling incoming calls from rival networks.
Scrapping IUC, or reducing it, would benefit Jio, which has more outgoing traffic than incoming calls. Bharti Airtel and Vodafone Idea earn a portion of their revenue from IUC as their incoming traffic is higher than outgoing.
Airtel has backed the extension as it believes that traffic symmetry has not been achieved. Vodafone Idea, too, has said in its comments that there was a need to extend the applicable date to move to a zero-IUC regime and, wherever Bill and Keep exists, it is based on mutual agreement among operators when there is symmetry in traffic.
However, Jio has alleged that perfect traffic symmetry is statistically impossible and Trai’s rethink will result in “protectionism, which is bound to result into technology stagnation”. This, Jio said, will jeopardise the government’s Digital India programme.
On Monday, Trai uploaded the submissions made by operators on its website. In its comments to the regulator, Jio said if the authority does not scrap IUC, there will be little incentive for mobile service providers to invest in technology migration as long as the returns are assured to them in the form of this subsidy.
Meanwhile, Airtel and Vodafone Idea have said many customers in India still remain on legacy networks. “The projections by GSMA for India also predict that 12-13% of customers will continue to be on 2G handsets till 2025,” Airtel said.