India’s telecom watchdog has extended the period of interconnect usage charges (IUC) for the industry in a move expected to provide relief to legacy telecom operators.
The interconnect usage charge is levied by a mobile network while handling incoming calls from rival networks.
The Telecom Regulatory Authority of India (TRAI) on Tuesday deferred its decision to scrap the charge by one year to January 2021. It had earlier planned to end the tariff by the end of this year.
As a result, telecom companies will continue to earn six paise per minute for every mobile call they receive on their network until December 31, 2020.
“On the basis of comments received from stakeholders in writing and during the open house discussion, and its own analysis, the authority has prescribed the revised date of applicability of Bill and Keep regime, ie, zero termination charges in respect of wireless to wireless domestic calls w.e.f January 1, 2021 through these regulations,” the regulatory authority said, reported the Mint newspaper.
Scrapping the IUC or reducing it would benefit an operator with more outgoing traffic than incoming calls. The latest move will come as a relief for Bharti Airtel and Vodafone Idea, which earn a portion of their revenue from IUC as their incoming traffic is higher than outgoing and they were against the scrapping of IUC.
Reliance Jio, which had disrupted the Indian telecom industry by offering freebies and low tariffs, wanted the charge scrapped. As of the end of June, 64% of its total traffic was outgoing.
TRAI had in September floated a fresh consultation paper to see if there was a need to revise the applicable date for scrapping interconnect charges, given the continuing imbalance in inter-operator traffic. This tariff was in 2017 reduced to 6 paise from 14 paise.
The telcom lobby body Cellular Operators Association of India has welcomed the decision, but said it hoped for a two-year extension, the Economic Times reported.
Interestingly, from October onwards Reliance Jio decided to recover the inter-connect usage charge of 6 paise per minute for mobile voice calls to other operators from customers.
Reliance Jio paid dues worth 135 billion rupees (US$1.90 billion) in the last three years to incumbents like Bharti Airtel and Vodafone Idea.
Jio was paying charges from its own resources to Airtel and Vodafone-Idea etc, while offering free voice calls to its customers. It was reportedly banking on the telecom watchdog’s earlier stand that it will be withdrawing the charges by the end of 2019.
Minister flays Vodafone
In a related development, Telecom Minister Ravi Shankar Prasad hit out at British telco Vodafone for ‘dictating’ terms to India when it threatened to withdraw from the Indian market following a Supreme Court ruling on spectrum charges.
After the Supreme Court’s ruling on the adjusted gross revenues that created a liability of 1.4 trillion rupees ($19.70 billion) for telecom firms, Vodafone’s global leadership had cast doubts over the future of the company in India.
“I don’t appreciate this kind of statement, firmly and clearly. We have given all the options of doing business but no one should dictate terms to us. India is a sovereign country,” Prasad said at an event, the Press Trust of India reported.
The minister said the government had given a potential benefit of up to 420 billion rupees ($5.91 billion) by agreeing to defer the spectrum repayment period for the telecom firms and expressed an inability to do anything beyond that.
He also said that state-owned telecom firms Mahanagar Telecom Nagar Ltd and Bharat Sanchar Nigam Ltd were strategic assets that should remain in the fray and ensure better competition.
The two companies recently announced a voluntary retirement scheme and nearly 79,000 employees opted for that. This expected to bring down the wage bill by 13 billion rupees ($183 million) this fiscal year.