Trai move on interconnect user charge likely to face Reliance Jio challenge

High tariffs on voice calls force 2G, 3G customers to make missed calls to customers on Jio, soliciting a large amount of offnet voice calls from its subscribers to the network of incumbent operators

The move by the Telecom Regulatory Authority of India (Trai) to float a discussion paper on deferring its earlier decision of introducing a zero interconnect user charge (IUC) regime in January next year has been questioned by some leading telcos.

According to sources close to Reliance Jio, the telco has squarely blamed incumbent operators, who have kept high voice tariffs for their 2G and 3G customers, discouraging usage, and overdependence on 2G and 3G customers as the key reasons for continuing asymmetry in their own network between their offnet (calls to other competing networks) incoming calls to outgoing calls.  

Sources close to Jio say the high tariffs on voice calls — ranging from 2.5 paise per second to 60 paise a minute — force 2G and 3G customers to make missed calls to customers on Jio, soliciting a large amount of offnet voice calls from its subscribers to the network of incumbent operators. 

Jio subscribers make the calls because they are unlimited and free, while incumbent operators, they say, charge stiff tariffs. But the IUC charge is paid to the telco where the call terminates, and in this case it is the incumbent players. 

That is reflected in the fact that while Jio’s offnet outgoing calls as a percentage of all off net calls was 64.25 per cent in June (on which they have to pay IUC charges), in the case of VIL it was 40.70 per cent and Airtel, it was 45.30 per cent. 

The incoming offnet calls on which the operator gets paid IUC charges was 37.75 per cent for Jio and 59.30 per cent and 54.70 per cent, for VIL and Airtel respectively. 

In simple terms Jio paid over Rs 851 crore (last quarter) to the three incumbent operators as IUC charges. And, while Airtel earned Rs 200 crore a quarter VIL is estimated to make Rs 370 crore Once the incoming and outgoing calls between two operators reach 50 per cent each, telcos do not have to pay to each other. The expectation was that Jio which was late entrant would reach that stage by December and there would not be any need for IUC charges at all. Trai had cut the IUC rate to only 6 paise a call from October 1 2017, and said it would be scrapped by January 2020.    

According to data available the missed calls on Jio’s network from two private incumbent operators ranges from 17.6 per cent to as high as 31.7 per cent. On average across the 22 circles it is 21-25 per cent, say sources.  

However incumbent operators say that telcos like Bharti already have 4G coverage in 93 per cent of the country, but unlike Jio they offer customers 2G services giving them a choice unlike Jio. So it is a matter of customer choice if they have more 2G/3G customers rather than 4G. Incumbent operators say that in order to continue to serve their 2G customers who cannot afford 4G technology Trai should look at increasing the IUC from 6 paise to 14 paise. 

They also say that Jio’s decision to reduce the ring time of a call by more than half, has lead to more calls which are not picked on their networks, leading to their subscribers calling back. And one of the leading incumbent operator says that the number of off net outgoing calls to Jio from their network has gone up from 35 cent to 40 per cent as a result of this reduction in the ring call time. However, sources say that a reduction in ring time is essentially to improve the network efficiency. That is why while they have the least spectrum they handle maximum amount of data and voice.