TRAI cuts mobile termination charges 57%; eyes waiver by '20

TRAI revises IUC (Interconnect charges) to 6 paise/minute, effective Oct 1

One year after storming into India's mobile phone market with free data and voice services, billionaire Mukesh Ambani's telecom unit is gaining momentum against its bigger rivals via a regulatory decision to lower interconnection fees.

The move may see lower call charges as the telecom regulator has cut the rates paid by an operator for termination of mobile call on a rival network by nearly half from current 14 paise.

The experts are hoping that older telecoms would challenge Trai decision in the court.

However, from January 1, 2020, there will not be any IUC.

While newcomer Reliance Jio argued for an end to call termination charges, incumbent telecom operators such as Bharti Airtel, Vodafone India and Idea Cellular wanted the charges to be raised further instead.

"An IUC charge of 6 paise per minute will translate into savings of over Rs 5,000 crore for Jio while RCOM and Aircel will benefit by around Rs 250 crore", a source said. This will cripple our data-driven telecom revolution, unless the government scraps most legacy fees, auctions spectrum at reasonable rates, and scraps revenue sharing, spectrum-use fees and IUC altogether.

Indian regulator TRAI more than halved the interconnect usage charge (IUC).




TRAI held multiple correspondences with telecom operators to ascertain their views on the issue and then finally issued the new "Telecommunication Interconnection Usage Charges (Thirteenth Amendment) Regulations which prescribes Domestic Termination Charges".

Jio, Bharti Airtel and No.3 operator Idea Cellular did not immediately respond to requests for comment.

To recall, incumbents have demanded to increase the IUC rates to 28- 35 paise per minute from the present level of 14 paise a minute.

It is believed that telcos with more subscribers, such as Airtel and Vodafone, will be at a loss because their larger subscriber base is going to - cumulatively - make more voice calls to other networks than the calls made by customers of smaller operators.

Overall, Jio and telecom users, both are victorious here.

Owing to the tsunami of "free" calls originating from Jio's network to other operators it has paid a hefty sum in IUC till now. "Operators would be able to offer consumers a wider variety of retail packages and tariff structures".

While the brutal price war unleashed by Jio since it entered the market a year ago helped it acquire 100 million users in just six months, it worsened conditions for its competitors, including Bharti Airtel and Vodafone, as their revenues declined. These charges are passed on to subscribers by service providers as part of the tariffs.

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