TRAI reduces interconnect charges

A service provider has to pay an interconnection usage charge to its counterpart to link a customer's call to the latter's network

Customers could benefit from lower rates, with the Telecom Regulatory Authority of India (Trai) on Monday cutting  interconnection usage charges (IUC) for mobile phones to 14 paise (p) and doing away with it for landlines.

A service provider has to pay IUC to its counterpart to link a customer’s call to the latter’s network. Now, calls from landlines of one network to landlines or mobile phones of other networks will be exempt from this. Earlier, it was 20p.

Before the revision, calls from mobiles also incurred 20p.

“To promote investment in, and adoption of, wireline networks, so that these may become an effective vehicle for the delivery of high-speed internet in the country, the authority has decided to prescribe the fixed termination charge and the mobile termination charge (MTC) for wireline-to-wireless calls as zero,” the Trai said on Monday.

The IUC gets added to the price of the call, which the customer has to pay.

Landline connections in the country have been declining since last few years as more and more people shifted towards mobile phones. As of December, the mobile subscriber base was 943 million, against landlines’ 27 million.

“The authority is of the opinion that in case the MTC is set to zero for wireline-to-wireless calls, wireline access providers would be able to provide innovative rate packages, such as flat rental plans, with unlimited or a significantly large number of outgoing calls,” the Trai said.

Similarly, in case the FTC for calls originating from wireless networks and terminating on wireline networks is set to zero, this would propel wireless access providers to offer cheaper tariffs for wireless-to-wireline calls, it said.

Hemant Joshi, partner, Deloitte Haskins & Sells, said, “The Trai’s move is positive and a healthy sign for the telecom sector. But since the rates in India are the lowest in the world, and in view of high spectrum costs and taxes faced by operators, these may not be able to pass on the benefit to consumers in full.”

Uninor said, “We welcome Trai's decision. This offers a level-playing field to new operators. A lower IUC regime will give more flexibility to rate planning and benefit consumers. This will spur increased mobile usage and help increase the teledensity in India."