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

Airtel Vodafone slam TRAI’s IUC cut Reliance Jio says consumers to benefit

The Interconnect Usage Charges (IUC) has been one contended issue, recently questioned by Reliance Jio, which termed IUC as an "artificial barrier".

The telecom regulator on Tuesday slashed termination charge on mobile voice calls to 6 paise a minute, from the current 14 paise per minute which would reduce cost of such calls. "When mobile operators decide on investment levels, they reasonably anticipate IUC for terminating traffic on their network", Koong pointed out.

Industry analysts feel the decision will benefit Jio, which was at the forefront pressing for lower ICU and eventually scrapping it.

"On the basis of comments received from stakeholders, in writing or during the open house discussion or during the workshop, the Authority has prescribed revised domestic mobile termination charges through these regulations", Trai said in a statement. It may also lead to a loss of Rs 2,000 crore to Airtel, Rs 1,500 crore to Vodafone and Rs 1,200 crore to Idea, the experts said.

The new rate will be applicable from October 1, 2017, and will be completely eliminated from January 1, 2020.

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Bharti Airtel, Vodafone India and Idea Cellular, who were facing a big challenge to their consumer base from Jio, were pushing for an immediate increase in IUC to 30-35 paise per minute.

The interconnect usage charge for all types of domestic calls will be zero from 2020. However, TRAI has been in support for reducing IUC charges off late.

Newcomer Reliance Jio, which has been aggressively selling its services by offering deep discounts and free handsets, has sought lower interconnect charges as its subscribers make more calls to rival networks while paying lower rates.

Mobile Termination Charges (MTC), now 14 paise, are payable by the operator whose subscriber makes a call to the operator whose subscriber receives the call, and directly impact the tariff.

Singtel, which owns a total of 36.27% in Bharti Airtel, added that in an intensely competitive market telcos would not be able to raise consumer tariffs to recover lost IUC, if a move in that direction was made.

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