February 22, 2018

IUC cut disastrous, incumbent telcos may move court: COAI

20 September 2017, 01:05 | Ruben Fields

Bharti Airtel said the telecom industry was facing severe financial stress

Bharti Airtel said the telecom industry was facing severe financial stress

A majority of the members of the Cellular Operators Association of India are "extremely disappointed" by the reduction and intend to move court "as it is clearly detrimental", said Rajan Mathews, director general.

Mobile bills are set to decrease as the Telecom Regulatory Authority of India (Trai) on Tuesday cut interconnection usage charge (IUC) by 8 paise per minute. "Globally, in a calling-party-pays regime, there is no zero-IUC regulation". The move was said to be implemented after the latest telecom operator, Reliance Jio had requested for the charges to be reduced and eventually scrapped in order to provide better and cheaper call rates to the customers.

Effective October 1st, TRAI has reduced IUC charges to 6 paise/minute from the existing 14 paise/minute.

September 19: The Telecom Regulatory Authority of India (Trai) on Tuesday slashed the interconnect usage charge (IUC) from 14 paise minute to 6 paise per minute, which will become effective from October 1.

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The termination charge is paid by the telecom operator from where the call is being made; to the telecom operator on whose network the call is being received.

"Lower termination charges are, therefore, likely to benefit consumers overall (both fixed and mobile) because operators will have greater retail pricing flexibility". The IUC will be 6 paise per minute from October 1.

"Interconnect charges (are) important in the current scenario, where traffic asymmetries have increased to unprecedented level of 10:1 as the new operator (Reliance Jio) offers free voice service", Birla wrote. "There are too high stakes involved". However, the older telecom players argue that costs are rising in the telecom business and a cut in interconnect charges will not make any difference to call charges. Between 2004 and 2015, the IUC rate was cut by as much as 53 per cent from a peak of 30 paise/minute to 14 paise/minute to reflect the true cost of terminating a call.

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