Telcos seek to defer IUC review to next financial year

Unlike others Reliance Jio Infocomm and Reliance Communications have suggested that the charges should be brought down to zero at the earliest

The review of interconnect usage charges (IUC), initiated by the Telecom Regulatory Authority of India (Trai), has divided the telecom industry with the incumbents calling for a deferment of the exercise till April next year, while Reliance Jio Infocomm and Reliance Communications have suggested that the charges should be brought down to zero at the earliest.

In its written comments submitted to Trai, the GSM industry body Cellular Operators Association of India (COAI) has asked the regulator to defer the review of IUC till April 2017. Telecom operators, including Bharti Airtel, Vodafone and Idea Cellular have sought to defer the review till the original timeline of FY18.

Interconnect charges are paid by a telecom operator to another when its call terminates on the latter’s network. Currently, the charges are 14 paise per minute for wireless calls, but Trai has sought comments from stakeholders on reviewing these charges. COAI had said the current interconnect regime was implemented by the regulator in March 2015 and it was clearly stated in 2015 that the next review would be held in 2017-18.

“It is therefore critical that the IUC review should not be held at this stage and be deferred by some months, that is, after end March 2017… By such time there will be more clarity on several issues,” COAI said in its latest submission to Trai.

The industry body further said that proposed fixed mobile telephony service of BSNL and internet telephony could not be trigger for initiation of the IUC consultation.

Airtel said the reasons for an early review of IUC were not substantial enough and the exercise seems to have been carried out in haste and should be undertaken only in the next financial year.

Trai had extended the date for receiving comments on the paper twice. After two extensions, the regulator fixed October 17 as deadline for comments. The discussion paper, which came out on August 5, created a flutter in the telecom sector with COAI calling Trai “biased against incumbents”.

COAI had termed the Trai paper unfair and alleged that the authority’s exercise was aimed at “hurting the financial and operational viability of existing operators.” Regarding the questions asked in the paper, most of the incumbent operators have proposed cost-based principle, barring Jio and R-Com, which have supported the ‘bill and keep’ approach.

The cost-based model includes network operating costs, overhead costs, spectrum costs and capital costs, and these, as per incumbent operators including Airtel, Vodafone, Idea, BSNL and Telenor, should form the basis of determining the charges. However, Jio and R-Com suggested to bring down the charges to zero and proposed adoption of ‘bill and keep’ method. Under ‘bill and keep’ regime, the originating operator bills its customers, keeps all revenue with itself, without sharing it and does not pay any amount for the termination of calls.

“We believe that an IUC or MTC (mobile termination charge) exercise when conducted should be based on a comprehensive costing review… the results of 2014, 2015 spectrum auctions were not factored in by the authority in 2015 calculation,” the COAI submission said.