Bharti drills legal loopholes in Trai's IUC consultation paper

Telecom major Bharti Airtel has opposed the consultation paper issued by regulator Trai to review interconnection usage charges (IUC), saying it is not being done in accordance with the directions of TDSAT and the Supreme Court and hence needs to be reframed.

“We are highly surprised to note that the consultation paper released by Trai on April 27, 2011, has not taken into consideration the observations and directions of either the Supreme Court or TDSAT,” the company said in a letter to Trai. Trai had sought comments on whether the time has come to abolish the termination charge, a levy paid by an operator to another service provider on whose network the call ends.

Phone companies pay one another IUC for using each other’s network to complete calls. Often, IUC changes affect consumer tariffs. Currently, the operators pay 20 paise a minute as a termination charge and it contributes significantly in the revenues of players, especially old operators.

The issue of IUC is a constant tussle between new operators and incumbent players. In view of over 90 per cent of subscribers registered with old operators, they have been opposing any move to do away with termination charge while the new operators are supporting the idea, saying this would give them a level playing field.

The Supreme Court had asked the Telecom Regulatory Authority of India (Trai) to implement the decision of the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) of September 29, 2009, in the matter of IUC within a period of four months.

Referring to the TDSAT decision, Airtel said the framework proposed by the tribunal mentions that the termination charge should be ‘cost based’ and on a ‘work done principle’ and not on the basis of ‘Bill and Keep’, wherein all costs, including operational and capital expenditure, should be included in calculation of IUC.

According to Trai, cost-based interconnection charges have a strong economic rationale. However there is no single, simple way to measure interconnection costs. In the Bill and Keep method, the service providers do not pay any termination charges to each other.

This approach implies levying no charges on interconnecting carriers at all. Each telecom operator ‘bills’ its own customers for outgoing traffic that it ‘sends’ to the other network, and ‘keeps’ all the revenue that results.

Giving the reference of the framework resulting out of TDSAT’s decision, Airtel said termination rates should not be asymmetric and there should be higher termination charges for international calls.

Asymmetric termination rates are believed to benefit new operators, who do not have a large customer base or a well-set telecom network. Airtel demanded that in accordance with the TDSAT judgement and Supreme Court order in the IUC related matter, Trai should withdraw all questions related to the ‘Bill and Keep’ approach, issues pertaining to asymmetric treatment and clearly indicate the options for cost-based methodology, which includes capex.

The telecom major also requested Trai to modify the consultation paper. However, Trai has not reacted to the request made by the company till date.