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Indian telecom operators dish out huge sums as interconnect charges between networks

Gurgaon ( NCR)October 15, 2019: A techINSIGHT released by techARC based on the analysis of TRAI’s annual report 2018, estimates that the telecom operators paid a total of Rs 11,838 crore as IUC or Interconnect User Charges.  These charges are paid for off-net calls to the operator on whose network a call terminates. ( 1crore is 10 million)
Vodafone paid the highest, Rs 4,214 crore followed by Airtel Rs 3,411, Jio Rs 2,809 and others including BSNL/MTNL Rs 1,405 crores respectively.  The average outgoing MoUs (Minutes of Usage) per annum were 312 minutes out of which 84.01% of the usage terminates on another wireless network.  The off-net wireless usage is 44.66% of the total wireless minutes of usage.
Says  Faisal Kawoosa, Founder & Chief Analyst, techARC: “While Jio has invested in an all IP network to support offering free voice calls, the disruption it entered with, incumbents are still not pure IP networks.  VoLTE enablement is still an ongoing process for other operators, thus would require IUC to offset the infrastructure cost they bear on terminating a call.”
“There has to be a different mechanism to be worked out regarding IUC where nobody loses money and there is harmony among operators.  One possible way could be allowing operators to charge a flat monthly fee per subscriber that they can offset the IUC against.  Instead of settling interconnect
Currently, an operator pays a little over Rs 100 per annum per subscriber as IUC to other operators, which is a little over Rs 8 per month.  Also, the subscriber number range for the three main operators isn’t too wide that would make one operator benefit more than the other.  If an IUC is charged from at source from existing subscribers, operators would be making more or less similar amount as they make from the existing formula.  The additional advantage that would come out of this method is that there would be collaborative competition among the operators rather than IUC becoming a bone of contention, which increasingly is.
The regulator has to enable a level playing field where a technology disruptor is at par with the incumbents, though everyone is pushed to adopt the latest technologies.  The advantages in terms of being able to offer new and more services along with increasing revenue opportunities should be an outcome of technology supremacy that the operators should make as their competitive advantage.  While the regulator must in a time bound manner push for new technology adoption, it must also build a healthy competitive ecosystem for the ultimate benefit of consumers. 

TechNote: Interconnect Usage Charge or IUC is a 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. IUC charges are fixed by Telecom Regulatory Authority of India (TRAI) and are currently at 6 paise per minute.TRAI, has repeatedly since 2011, affirmed its stance that the IUC charges should be brought down to Zero.




    


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