Airtel and Jio trade accusations over IUC rules

21 Jul 2017

The Telecom Regulatory Authority of India’s (TRAI’s) open house meeting to discuss interconnection usage charges (IUC) displayed the growing rift in the sector, with the incumbent cellcos on one side and newcomer Reliance Jio Infocomm (Jio) on the other. The Economic Times reports that the open house consultation saw Jio and Bharti Airtel trade accusations over the exploitation of the existing IUC system, and attempts to influence regulatory changes in their own favour – and to the detriment of the industry as a whole. The current IUC of INR0.14 (USD0.002) per minute includes a mobile termination fee and is intended to offset operational costs for network providers for cross-network calls terminating on their network.

Jio has called for the regulator to lower the IUC to zero, noting that that the TRAI had made an assurance to that effect to the Supreme Court in 2011 but had failed to deliver on the promise. The cellco went on to accuse incumbents Airtel, Idea Cellular and Vodafone India, of over-charging for interconnection. Jio went on to dismiss claims from the trio that the IUC was needed to maintain and expand networks in rural areas, promising to provide 99% population coverage by the end of the year, regardless of the IUC level. Jio’s stance was reportedly supported by a number of MPs present, the politicians arguing in favour of the reduction as it would lower end-user costs and make services more affordable. Lok Sabha MP Ninong Ering was quoted as saying: ‘When the TRAI has submitted before Supreme Court in 2011 that it will end termination charge on mobile calls in 2014, then it should have done it. At least now remove it so that burden on consumers is lowered and calls are made more affordable.’

For their part, the incumbents sought an increase in the IUC to INR0.3 to INR0.4 per minute, citing the asymmetry in termination caused by Jio’s offer of free calls to its consumers. According to the trio the current level of IUC is insufficient to cover the cost of receiving the ‘tsunami’ of calls from Jio subscribers. Responding to Jio’s accusations that the trio had abused the IUC system to profit from terminating calls, Airtel said it was in fact losing INR5.5 billion per quarter thanks to the call asymmetry. Indeed, the operator claimed that Jio was looking to transfer its annual termination costs of between INR150 billion and INR200 billion to its rivals in an effort to throttle competition and establish a monopoly. ‘In effect, Reliance Jio aims to build its business by getting a free ride on the highways built by Airtel and other operators,’ commented Airtel’s chief regulatory officer, Ravi Gandhi, adding: ‘Their proposal … will further burden other operators and make them weak. At the same time, it allows Reliance Jio to continue with its strategy of predatory pricing and ultimately throttle all competition.’