Reliance Jio vs Airtel: Why operators are fighting over interconnect usage charges
Reliance Jio's decision to charge its subscribers 6 paise per minute for voice calls on other networks drew sharp reaction from the rival Airtel and Vodafone Idea. The real bone of contention, however, is the interconnect usage charges which Reliance Jio wants abolished.
What is interconnect usage charges?
Also known as IUC, it's a small fee that one telecom operator pays to another when a subscriber makes a call from the former's network to the latter. These calls between two networks are called mobile offnet calls. As fixed by the Telecom Regulatory Authority of India (TRAI), operators can charge 6 paise per minute as IUC. The regulator had earlier aimed at ending the IUC regime by January, 2020.
Why is Reliance Jio opposing IUC?
Reliance Jio entered the Indian telecom market in 2015 with ultra low-cost plans. All these plans promised free voice calls to consumers. Reliance Jio bore the cost of IUC for the free voice calls made from its network to others'. The operator revealed it had paid nearly ₹13,500 crore in IUC to other network providers in the last three years.
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Why is Reliance Jio now charging customers?
There are two key factors. Reliance Jio had hoped that the IUC will be abolished by January, 2020. The TRAI, however, recently floated a new consultation paper on the IUC, triggering speculations of deferring the older decision. Another reason, according to Reliance Jio, is the asymmetry of calls between its network to rival networks.
Since voice calls are free on Jio network, consumers from rival networks give missed calls on Jio which subsequently converts into outgoing calls. Reliance Jio said its network 25 to 30 crore missed calls on a daily basis and the call back made by the Jio customers results in 65 to 75 crore minutes of outgoing traffic.
What are Airtel, Vodafone Idea saying on IUC?
Airtel in its statement said that the telecom industry is in a state of deep financial stress and that several telecom operators have gone bankrupt in the last three years. It also pointed out that India still has a massive 2G customers base and that 6 paise per minute is already lower than the real cost involved in completing a call.
"The assumptions made by TRAI were to evaluate two factors: One was the adoption of VoLTE, which TRAI assumed will bring the cost down. Second, with the growth of smaller sized operators, symmetry of traffic would ensue. Both these have not materialized," Airtel said.
Vodafone Idea also pointed out the large customer base still on 2G network. It also said that Reliance Jio's recent move to reduce ringing time could affect the revenues of other operators.
"Vodafone Idea operates basis the singular principle of pro-consumer and pro-choice. Accordingly, our offerings are completely transparent, affordable and cater to a cross section of society and consumers with varying consumption needs via multiple technologies 2G, 3G & 4G. Even today over 50% of Indian citizens use 2g and feature phones and we service them in remote parts of the country even when it is unprofitable for us to do so," Vodafone Idea said.