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Airtel, Vodafone user's bill could go up if Trai accepts their demand

Leading telecom players Bharti Airtel, Vodafone and Idea Cellular on Tuesday sought an increase in the interconnection usage charge (IUC) from the current level of 14 paise per minute.

Mail Today Bureau   New Delhi     Last Updated: July 19, 2017  | 13:05 IST
Airtel, Vodafone user's bill could go up if Trai accepts their demand

Leading telecom players Bharti Airtel, Vodafone and Idea Cellular on Tuesday sought an increase in the interconnection usage charge (IUC) from the current level of 14 paise per minute on the ground that terminating incoming calls from other telcos on their networks costs 30-35 paise per minute.

Any increase in IUC would lead to higher mobile call rates as the charge is included in the overall tariff paid by consumers.

New entrant Reliance Jio, however, came out strongly in favour not levying any charge on incoming calls.

The IUC is fixed by the Telecom Regulatory Authority of India. At present IUC of 14 paise per minute is levied on every incoming domestic call by the telecom operator receiving it.

When asked if telecom operators suggested increasing mobile termination rate in the range of 30-35 paise from 14 paise levels at present, Trai chairman Sharma answered in the affirmative without naming any particular operator.
Today
 all the major operators participated. Some operators asked for reducing it, some said keep it constant at current level. Some others said that it should be increased,'' Sharma told journalists after a day long workshop meeting with telecom operators.

He said there are other charges that are part of IUC but 14 paise charge for handling domestic calls dominated the discussion during the workshop because of the high volume of calls that are subjected to these charges.

He did not give any timeline for firming up the IUC recommendations but said they will be finalised soon.

Airtel has said their cost of carrying incoming call is 30 paise and hence IUC should be raised so that they are able to recover their cost, said a senior industry executive who did not want to be identified.

Vodafone said the cost of carrying incoming calls on its network is 30 paise without taking into account the licence fees and 34 paise after including it, he disclosed.

Aditya Birla group company Idea Cellular has said that cost of carrying incoming call on its network is around 30 paise as per methodology used by Trai, while as per its own calculation the cost is 35 paise per minute. The company stated that it is unable to recover its basic cost at the current IUC rates.

Idea wants IUC to be raised so that telecom operators are able to recover cost of carrying load of incoming calls from other networks.

Trai in a Supreme Court affidavit in 2011 had said that telecom operators should be given time till 2014 to move to bill and keep regime. Under this, operators only keep record of incoming calls on their network but don't raise any demand from other operators.

The meeting comes amidst the ongoing price war between the incumbent players and new entrant Reliance Jio which has been offering free calls and data at dirt cheap rates.

The established players have been forced to slash tariffs to protect their market share and as a result while some companies have plunged into a loss in recent quarters others have seen their profits plummet.

The incumbent players claim that around 30% of the telecom sector earnings go to the government in taxes and levies, including spectrum usage charge and licence fees. The total debt for the sector is at around Rs 4.5 lakh crore.

The government has started looking into the issue as the decline in profits will not only hit its revenue but could also lead to bad loans in the telecom sector having a cascading effect on banks.

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