Trai proposal: Reliance Jio, Bharti Airtel, Vodafone Idea to clash over reduction in IUC rate

Expect another round of fight between incumbent operators Bharti Airtel and Vodafone Idea and Reliance Jio over termination charges.

The Telecom Regulatory Authority of India (Trai) on Wednesday came out with a consultation paper to review the termination charges with the aim of making it zero (Bill and keep in technical parlance) from January 2020 as per a road map laid by it two years go. However, since the call imbalance (incoming vs outgoing) between the incumbents and Jio — though less than what was two years ago — still exists, incumbents are expected to oppose any move to make termination rates zero.

Termination charge is paid to the operator on whose network the call terminates by the originating network. Trai had last reduced it in September 2017 by a massive 57% to 6 paise per minute. Prior to it, the rate was 14 paise per minute. At that time, the Trai had said it proposes that from January 2020 operators move to a regime of zero rate.

In its consultation paper issued on Wednesday, the regulator said, “While revisiting the issue, based on the actual developments during the last two years, it needs to be decided as to whether the date 1.1.2020, earlier fixed for implementing BAK regime (zero termination charge), through IUC Regulations 2017, still holds or it requires reconsideration.” It has said with consolidation in the sector and reduced tariffs, the average outgo per minute which was Rs 0.23/ minute at end of September 2017 has come down to Rs 0.13/minute at March 2019 end.

Trai said traffic imbalance between an only 4G operator (Reliance Jio) and other operators has reduced from peak of approximately 60 billion minutes per month in December 2017 to 40 billion minutes per month in June 2019.

According to figures shared by Trai, Bharti’s incoming calls (from other networks) stands at 54.70% against 45.30% of outgoing calls. Jio’s incoming calls stand at 35.75% and outgoing at 64.25%, while for Vodafone Idea incoming calls are 59.30% and outgoing at 40.70%.

Since termination charges are paid on the basis of outgoing calls, it can be seen that Jio has the lowest percentage of such calls so its outgo on termination will be the highest. It is because of this imbalance that the incumbents would oppose any move by Trai to reduce the termination charges to zero by January.

Reasoning in favour of reduction of the rate, Trai had earlier said the mismatch between Jio and incumbent operators will go in a couple of years when most of the players would switch to 4G networks where the cost of terminating calls is very low and hence can be absorbed by the operators.

However, developments have not kept pace with its expectations. Trai has said in its paper that while operators are adopting packet-based technologies and the footprint of 4G is increasing, it is also a fact that not all operators are expanding their 4G at the same pace.

For instance, it said for the two public sector telecom firms, the voice call traffic is handled by 2G and 3G only while for the two incumbent operators, only 5% and 18% of their voice traffic is being handled by 4G. Only in case of Jio, all the voice traffic is handled by 4G network or packet-switch network.