Reliance Jio wants to take a free ride on our network, alleges Airtel

Estimates show 0 mobile termination charge would mean hit of Rs 15,000-20,000 cr per year for sector

Leading telecom operator Bharti Airtel on Thursday alleged in a hard-hitting statement that the latest entrant Reliance Jio aimed to build its business by getting a free ride on the highways made by incumbents, while referring to the tussle over interconnect charges. Ever since Jio’s launch in September 2016 along with heavily discounted tariffs and free services, the telecom space has witnessed intense competition. 

Airtel said the 'bill and keep' method for interconnect, which means zero mobile termination charge (MTC), proposed by Jio would allow the newcomer to continue with its strategy of predatory pricing and ultimately throttle all competition. Airtel said due to the below-cost MTC in the current regime, it had suffered losses to the tune of Rs 550 crore per quarter as a tsunami of calls was originating from Jio’s network.

Proposing bill and keep method, Jio said the poor people in the country were subsidising the inefficient network of incumbent operators as the cost of carrying calls on 4G network was negligible. This allegation was denied by Airtel and others. Going by estimates, the industry has suffered a loss of Rs 9,000 crore in a year due to Jio’s incoming calls.

In 2003, India adopted the Calling Party Pays (CPP) regime in which only outgoing calls are charged. In a CPP regime, the tariff charged to the calling customer includes the cost of terminating the call on the receiving network. Therefore, the CPP regime has MTC, which is like a clearing house where one operator pays another for using its network to carry incoming calls.

Airtel said barring four countries, the CPP regime was the globally accepted norm. In these four countries where MTC is zero, the customer pays for incoming calls. 

As the spread of networks and the extent of incoming calls varies across operators, it is vital that MTC covers the full cost of terminating a call. “By proposing a transition to the ‘bill and keep’ regime, Jio wants to simply transfer its cost to Airtel and other operators,” Airtel said. 

Estimates show a zero MTC would mean a hit of Rs 15,000-20,000 crore per year for the industry. The Sunil Bharti-led firm said such cost transfer would allow Jio to use its muscle power and price its services in a predatory manner. “This is the sinister design of Jio. The question to ask is does India want a monopoly situation in telecom,” Ravi Gandhi, chief regulatory officer, Bharti Airtel, said.

Regarding the allegations of Jio about Airtel earning excess revenue from MTC, the company said it was not only false but laughable. 

“The charge of 14 paisa is well below the cost of producing a minute, which is currently at 35 paisa. In fact, with the tsunami of calls originating from Jio’s network, Airtel loses 21 paisa for every minute that is carried on its network,” Airtel said.