Reliance Jio prevails over Airtel, Idea as Trai cuts IUC

Telecom operators to seek legal help against TRAI's IUC slashing

New entrant Reliance Jio said that cost of delivering calls on new technologies is nearly negligible and incumbents continue to gain from IUC even after having recovered cost of their entire network.

Terming the cut in call termination charges as "disastrous", industry body COAI today said its members - which include the likes of Bharti Airtel and Vodafone - may move court against regulator Trai's decision. "The reduction in the mobile termination charge is likely to yield consumer benefits", Trai said in its new regulation even as older operators such as Bharti Airtel, Vodafone and Idea Cellular strongly oppose the move, rather fighting for a hike in IUC rates.

The Telecom Regulatory Authority of India (Trai) said, "Mobile call connection charge cut to 6 paise per minute from 14 paise now, effective October 1". The IUC will be 6 paise per minute from October 1.

Notably, the telecom disruptor Reliance Jio has been advocating lowering termination charges on grounds that it will benefit the customers. Established companies including Airtel, Idea and Vodafone wanted the IUC to be increased to help recover their investments in acquiring spectrum and building networks.

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The new rate will be applicable from October 1, 2017, and will be completely eliminated from January 1, 2020.

The telecom regulator had reduced the interconnect charges in 2015 to just 14 paise a call, much to the chagrin of state-run entities BSNL and MTNL as it reduced their revenues drastically. However, TRAI has been in support for reducing IUC charges off late.

Reliance Jio, which has built up a subscriber base of 128 million since it started commercial operations last September on the back of its offer of free voice calls, had wanted the interconnect usage charge (IUC) cut to zero.

Khullar added that the coming days could see a replay of the events in 2007, when the IUC was reduced from 30 paise to 20 paise.

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