- TRAI delays scrapping of IUC Charges To Paid by Jio till January 2021 & Vodafone Airtel Will breath relief after this decision.
Tuesday’s telecom regulator postponed a decision to abolish a fee charged by operators to handle incoming calls from rival networks by one year, providing relief to older telcos generating part of their revenue from interconnecting usage fees (IUC).
India’s Telecom Regulatory Authority (Trai) is now going to remove IUC from 1 January 2021 instead of next month. As a result, by December 31, 2020, operators will continue to earn 6 paise a minute for each phone call they receive on their networks.
Approximately two years after it decided to scrap the levy on 1 January 2020, a move that older telcos Vodafone Idea Ltd and Bharti Airtel Ltd claimed favored newer entrant Reliance Jio Infocomm Ltd because their outgoing voice traffic was much higher than the incoming one. The scrapping of IUC would support a more outgoing traffic manager.
The decision of Trai comes as a major relief to Bharti Airtel and Vodafone Idea, who posted record losses in the quarter ended September 30. Jio, who as of June-end had 64 percent of his total traffic, supported the levy being abolished.
Regime ensures that operators would not make any money to receive calls on their networks. If the flow of traffic between operators is symmetrical, no operator will be harmed as it is simply a fee charged to another by one operator.
“Trai regulation to hold IUC at the current 6p / min per year is along the lines anticipated and provides Vodafone with the most short-term relief
The regulator cited “inadequate” acceptance of 4 G voice calls technologies and asymmetries in inter-operator traffic as reasons for delaying IUC’s scrapping. “At this stage, it may not be advisable to introduce’ bill and hold’ as of 1 January 2020,” Trai said.
“Implementation of the bill and keeping from 1 January 2020, with the present inadequate adoption of 4 G technologies by consumers and asymmetries in traffic, may affect the level playing field between service providers and, in turn, effective market competition,” the regulator said. Emailed inquiries to Jio, Airtel and Vodafone Idea remained unanswered until the time of the press.
Trai had floated a fresh consultation paper on 18 September to examine whether, given the ongoing imbalance in inter-operator traffic, there was a need to review the applicable date for scrapping IUC.
Airtel and Vodafone Idea, currently struggling with shrinking revenue after a price war triggered by Jio’s September 2016 entry, then welcomed Trai’s regulatory rethink. However, Jio said a delay in scrapping IUC was unwarranted, arbitrary, and anti-poor, affecting not only the authority’s credibility but also sabotaging the Digital India mission of the government.
“This is a welcome step in the right direction,” said Rajan Mathews, Chief Executive Officer of the Cellular Operators Association of India Lobby. “We look forward to continued government and regulatory support to tackle the severe financial pressure in the telecommunications sector.”
In September 2017, Trai approved an IUC reduction from 14 paise earlier and abo to 6 paises per minute as of 1 October 2017. Local telecom operators were hit hard by the order, reeling from the fierce price war caused by Jio’s entry.
Jio is the only pure-4G network in India. Vodafone Idea operates a mix of 2G, 3G, and 4G networks. Airtel operates 2G and 4G networks and is in the process of phasing out 3G by March next year.