Interconnect Usage Charge is the cost paid by one mobile telecom operator to another, when its customers make outgoing mobile calls to the other operator’s customers.
Reliance Jio on October 9 said that it will recover 6 paise per minute from its customers towards Interconnect Usage Charge for all off-net mobile voice calls so long as IUC charges exist.
This follows the recent consultation paper on IUC floated by the Telecom Regulatory Authority of India to see if to see if there is a need to revise the applicable date for scrapping IUC, which at present is January 1, 2020.
Moneycontrol explains the IUC dispute and what it means for Jio customers.
What is Interconnect Usage Charge or IUC?
It is the cost paid by one mobile telecom operator to another, when its customers make outgoing mobile calls to the other operator’s customers. These calls between two different networks are known as mobile off-net calls.
Who sets the IUC charges, and what is the current IUC charge?
The Telecom Regulatory Authority of India (TRAI) sets the IUC charges. It is currently at 6 paise per minute.
What has TRAI’s stand on IUC been in the past?
In its affidavit in the supreme Court as back as October 2011, the TRAI had said “there should be progressive reduction in termination charges finally converging to zero termination charge … at the end of 2 years from the present.”
TRAI felt termination charges were a disincentive to deployment of new technologies such as VoLTE and migration to IP networks by operators
In 2017, TRAI issued the Telecommunication Interconnection Usage Charges (Thirteenth Amendment) Regulations, 2017 under which the IUC rate was fixed at 6 paise from October 1, 2017, till December 31, 2019 and zero effective January 1, 2020.
What is Jio’s contention?
Relying on the repeated stance of TRAI and the amendment already made to the regulations reducing the IUC to Zero, Jio continued to pay IUC from its own resources to Airtel and Vodafone-Idea etc while offering free voice to its customers. So far, in the last three years Jio has paid nearly Rs 13,500 crore as NET IUC charges to the other operators.
How did other operators respond?
After the TRAI order of 2017, incumbent operators reduced voice tariffs for their 4G customers, but continued to charge exorbitant tariffs to their 35–40 crore 2G customers. According to Jio, they increased the tariffs for voice calls to around Rs. 1.50/ minute and also charge a minimum of Rs 500 / GB for data from their 2G customers.
How did this affect Jio?
Jio says that because of the price differential, the 35 - 40 crore 2G customers of Airtel and Vodafone-Idea give missed calls to Jio customers. Jio network receives 25 to 30 crore missed calls on a daily basis. This huge missed call phenomena converts the incoming calls to Jio into outgoing calls from Jio to other operators. The 25 to 30 crore missed calls per day should have resulted in 65 to 75 crore minutes of incoming traffic to Jio. Instead, the call back made by the Jio customers results in 65 to 75 crore minutes of outgoing traffic.
What is TRAI’s recent view on IUC?
In September 2019, TRAI floated a fresh consultation paper to see if there is a need to revise the applicable date for scrapping IUC, citing imbalance in inter-operator traffic. Zero IUC will benefit operators which have a higher share of outgoing traffic.
According to Jio, it is the tariff differential that is leading to higher outgoing calls from the Jio network. But for the differential, there would have been a balance in inter-operator traffic.
How has Jio responded?
Jio says the latest TRAI consultation paper has created regulatory uncertainty and so it (Jio) will recover this regulatory charge of 6 paise per minute for all off-net mobile voice calls so long as IUC charges exist.
How does this affect existing Jio customers?
For all recharges done by Jio customers starting today, calls made to other mobile operators will be charged at the prevailing IUC rate of 6 paise per minute through IUC top-up vouchers till such time that TRAI moves to zero termination charge regime. Presently, this date is 1st January 2020.
Which kind of calls will be exempt from the 6 paise per minute charge?
a) all Jio to Jio calls;
(b) all incoming calls;
(c) Jio to landline calls; and
(d) calls made using WhatsApp or FaceTime and similar platforms.
Additionally, Jio, with Reliance Retail, will ensure priority allocation of the JioPhone to frequently called 2G users from our Jio consumers. Jio will provide additional data entitlement of equivalent value based on IUC top-up Voucher consumption. This will ensure no increase in tariff for customers.Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.The Great Diwali Discount!
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