Reliance Jio prevails over Airtel, Idea as Trai cuts IUC

Steve Phelps
September 20, 2017

".if you reduce the termination charge, the principal beneficiary is Jio because they are the ones dumping traffic onto other networks".

"For mobile to mobile, termination charge has been reduced from 14 paise per minute to 6 paise per minute w.e.f. 1st October, 2017". "Even if IUC was lowered by half a paise, it would have gone to court", said a senior industry executive.

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". On the other hand, other established telecom service providers have been strongly opposing any such decrease as it will hit their revenue which they receive from these interconnection charges.

Domestic termination charges is the amount paid by the telecom operator whose user begins the call.

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In today's statement, TRAI also stated that the new rates will allow the telecom operators to offer better call rates and packages to the customers and that will eventually increase the mobile usage among the lower income families.

The regulator said the IUC charge would drop to zero from January 1, 2020 - a move that is expected to completely re-orient the telecom landscape. The latest move by TRAI is set to benefit Jio the most, however, it has come as a setback to the existing telecom operators including Airtel, Idea and Vodafone. The companies have, however, been countered equally aggressively by Mukesh Ambani's Reliance Jio, a company that heralded the new dirt-cheap tariff regime September a year ago when it launched its services with life-time free voice calling and very-low data tariffs. Telecom operators levy IUC on incoming calls from other networks and the charges are passed on to subscribers.

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.

"Lower termination charges are, therefore, likely to benefit consumers overall (both fixed and mobile) because operators will have greater retail pricing flexibility".

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