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India reducing termination fees from October

India reducing termination fees from October

Indian regulator TRAI (Telecom Regulatory Authority of India) is slashing the country’s interconnect charge by over 50% from 1st October, and will completely abolish the fee from 1st January 2020.

TRAI has spent over a year consulting with operators over potential changes to the mobile-to-mobile termination fee, which will be wound down from INR0.14 to INR0.06 ($0.0022 to $0.00094). However, its decision has been met with anger from several major Indian operators.

Vodafone India’s parent firm Vodafone Group last month argued that reducing the fee would provide a disproportionate benefit to newcomer Reliance Jio. The group described TRAI’s decision as “yet another retrograde regulatory measure that will significantly benefit the new entrant alone while adversely affect[ing] the rest of the industry.”

The operator added: “unless mitigated, this decision will have serious consequences for investment in rural coverage, undermining the government’s vision of a Digital India. We are disappointed with this decision and are now considering our options to respond to it.” The group’s CEO Vittorio Colao noted that Reliance Jio had been pushing the government to reduce the interconnect fee. He claimed that the fee was already well under the cost of processing incoming calls.

Meanwhile Singtel, which is the largest single shareholder in market leader Bharti Airtel, had written to the telecoms minister prior to TRAI’s decision arguing that a reduction of the fee was “likely to have adverse consequences for investment and long-term sustainability of the India telecoms sector. Ultimately, this would be to the detriment of customers.” The group’s CEO Chua Sock Koong said that the decision would “simply mean that there is less revenue available to mobile operators to finance both their existing and future investments”.

Bharti Airtel itself stated that “the suggested rate, which has been arrived at in a completely non-transparent fashion, benefits only one operator which enjoys a huge traffic asymmetry in its favour. The sharp drop in the rate will only help transfer part of its cost to other operators, thereby further worsening the financial health of the industry.”

TRAI claims that the reduced charges will provide greater flexibility in terms of retail prices, which will help consumers. However, the Cellular Operator Association of India said that some of its members were planning legal action against the fee reduction.

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