Trai cuts termination charges on ISD calls; Reliance Jio happy, others not

The telecom regulator said the reduction from 53 paise per minute to 30 paise was being done to curb the 'grey route' which was becoming a menace and posing serious security threat to the country

The Telecom Regulatory Authority of India (Trai) on Friday reduced the international call termination rate to 30 paise, which is 53 paise now, making calls to India cheaper.

The new rates will be effective on February 1. The regulator pointed out that it was doing so to curb the “grey route”, which was posing a security threat to the country.

Yet the move has been opposed by incumbent telecom operators, which say this will make the ratio between international incoming calls and outgoing calls more skewed.

In 2011 there was one outgoing call from India against five incoming calls, but currently that ratio has gone up to 1:20. So revenues from international calls for incumbent operators are going down while international carriers are making huge amounts of money at their expense.

Instead, the operators have represented to the government to increase the termination charges close to what customers in India pay when they call abroad, which is the key reason for high tariffs. They have been asking for a level playing field.

According to their estimates, by hiking the termination charges, India will earn at least Rs 60 billion of incremental forex for every Rs 1 increase in termination charges. They argue that currently the opposite is happening -- the country is losing foreign exchange by paying for the high termination charges in other countries. It will also ensure that Indian customers get affordable tariffs.

India has one of the lowest termination charges for international calls at 53 paise a minute. But when customers in India call abroad, they have to pay a hefty termination charge, which, on average, is seven-eight times (Rs 3.50 to Rs 4 a minute) more than what callers from abroad pay for calls to India.

 

So domestic customers pay as termination charges an average of Rs 7.70 per minute for calls to West Asia, Rs 2.48 a minute for calls to Europe and Rs 1.01 a minute for calls to the US to international carriers.

For the Sultanate of Oman, domestic customers fork out a staggering Rs 15.44, for Switzerland Rs 14.08, and for Singapore Rs 2.44 as termination charges to their carriers.

But Reliance Jio has given a contrarian view, which seems have stuck a chord with the regulator. In its presentations to the regulator, it has pointed out that an increase in termination charges will lead customers abroad to hasten their shift to other cheaper and free call alternatives such as Skype, Whatsapp, and Facebook. So even the revenues the telcos are getting will fall, just like the advent of Whatsapp messaging killed the SMS market.

It said as call costs drop, the chances are that people will use their phones rather than applications like Skype and Whatsapp to make calls. This, it said, will also reduce the growing menace of grey calls as these alternatives will no longer be so attractive. And thirdly as far as the termination rates in other countries are concerned, there is very little that Indian telcos or the government can do.