We need a 4G argument to settle the telecom dispute

The telecom sector needs to perform well for the Digital India initiative of the govt to reach out to the widest possible network of Indians

The unseemly scramble among the telecom companies on display over the interconnection problem has a win-win solution if only the broader issues are understood. 

The telecom sector needs to perform well for the Digital India initiative of the government to reach out to the widest possible network of Indians. This is the most significant macro-economic perspective in which to examine the current dispute to have emerged with Reliance Jio on one side and Airtel, Vodafone and Idea on the other side. How best should data services be made available to the Indian population across all states since most of the key initiatives of the government will use this access as the highway to reach them. 
 

In turn, this means the companies must invest more heavily in their networks. But for those investments to be cost effective they should be made in sectors where the returns would serve the highest number.
 

Does the controversy take forward this agenda. Not really. To figure this out, we need to ascertain what Reliance Jio has asked for from other telecom operators. Jio wants its voice calls (not data) originating from its network to callers located in the network of other telecom operators go through seamlessly. The demand is fair since under telecom regulations every operator promises to offer the others enough switching stations or points of interchange (PoI) to make this happen.

Companies pay each other Interconnection Usage Charges (IUC) for this service—typically the operator where the calls terminate earns the fee from whose network the calls originate. 
 

The problem has been created as Reliance Jio claims its customers are not getting this connectivity because of of the shortage of PoIs offered by the existing telecom operators. The operators claim a) there is a surge in the calls coming from Reliance Jio as it has offered voice telephony free bundled with its data services, b) the current rate of IUC is inadequate and those need to be revised upwards just as Reliance Jio claims the rates need to come down. The telecom regulator has floated a paper this year to discuss amending the IUC. 
 

Now, before this becomes difficult, lets see how this squares off with Digital India. It does not. Digital India is about data services which the telecom operators provide on their own network. Voice telephony is peripheral to it. Incidentally, none of the telecom operators quoted here have responded to email on this issue, possibly because of the sensitivities involved.
 

Yet the dispute among the operators on voice can take away the synergy needed among them at this point.  It is surprising that they have not made the following argument. The option is for the likes of Bharti et al at this juncture is to offer porting of calls originating in Reliance Jio’s 4G network to their own 4G network by offering as many PoI as needed.

Since, 4G transfer is cheap it is quite possible. It also would comply with the terms of their IUC commitment. To get the call to transfer from a 4G environment to a 2G environment should instead be left to the regulatory guidelines to wade through. This is because, whether a handset can receive a call from 4G or is limited to 2G is dependent on its technology — but that is a customer’s headache. If a person on a plain 2G handset cannot receive a call originating from the 4G enabled handset of Reliance Jio that is a problem that would need a regulatory intervention, by say offering an inducement to the older operators by raising IUC or some such. 
 

Once the argument is couched in these terms the options become forward looking. It also will encourage the environment for data connectivity and would allow the plans by various government machineries to set in motion their plans for digital connectivity to sail through. Companies can and must justifiably claim that the IUC regimes should occur in a 4G environment instead of the limited capability of the bands where only 2G enabled phones can operate. 
 

One suspects that the reason why this scenario has not come into play is less than needed investment by the older telecom operators so far. They have not ratcheted up their capacity in the 4G environment. They need to do so. But if at this juncture if the telecom regulator goads them to ramp up capacity in 2G at the cost of 4G, the interests of Digital India will be poorly served.