Why in news?
TRAI is considering a revision of Interconnection Usage Charges
What is Interconnection Usage Charges?
- This is a charge payable by a service provider, whose subscriber originates the call, to the service provider in whose network the call terminates.
- In a calling-party pays regime (CPP), if you originate a call, you pay your access provider, who in turn pays termination charges to the network you placed the call.
- This is paid to cover the network usage costs as the operator, on whose network the call terminates, carries the call on its network to the customers.
- This requires infrastructure investment thus, IUC ensures operators make appropriate investments to carry voice calls without terminations.
- Currently only calls made via wireless to wireless devices attract IUC in India.
What is the issue with IUC?
- All the telecom players except Reliance Jio supporting an increase in IUC rates, a battle is on the cards.
- The incumbent players prefer a hike in IUC or a status quo because a significant part of their network is still on 2G for which network costs are higher.
- The incumbents are stating that the termination charge of Rs.0.14 is already too low and does not even cover the cost of carrying the call.
- But the new entrant, Jio, would prefer lower or even nil termination charges as the number of calls originated by it are more than the calls terminated.
Why is it important?
- IUC is one of the main sources of income for telecom companies.
- Currently the domestic termination charge is at Rs.0.14 per minute while the international call termination is at Rs.0.53 per minute.
- The mobile users need to watch TRAI’s decision on IUC as it can impact on their mobile bill.
- Scrapping IUC benefit customers as it could bring down call tariffs.
- On the other hand, if IUC increases, telecom players may increase the tariff for their call services.
Source: Business Line
