The announcement that India’s regulator is to reverse plans to eliminate interconnect usage charges (IUCs) in 2020 has received an angry response from Reliance Jio, which is now planning to charge customers for outgoing calls.
The IUC is a cost paid by one mobile operator to another when its customers make outgoing mobile calls to the other operator’s customers. IUC charges are fixed by the Telecom Regulatory Authority of India (TRAI).
In a statement, India’s largest MNO said: “TRAI has repeatedly since 2011, affirmed its stance that the IUC charges should be brought down to zero,” It adds that, in the last three years Jio has paid an amount equivalent to about $1.9 billion as net IUC charges to the other operators. This vast amount is, apparently, because it has continued to offer free voice calls to its customers in the expectation that IUC will be dropped.
Jio has therefore said it plans to levy the fee on calls to other networks until TRAI brings an end to IUC. Incoming and calls to other Jio users will not face changes. Landlines are also excluded.
India’s regulator apparently changed its mind about IUCs after complaints from the other two major operators, Bharti Airtel and Vodafone Idea, that eliminating IUCs would deprive them of a key source of revenue. The underlying message here, however, is also about debt and tight margins; the highly competitive Indian market has made profitability difficult to maintain and eliminating IUC could cause further problems.
That, however, doesn’t appear to be Jio’s main concern. It points out that the price differential of free voice on the Jio network and high tariffs on 2G networks has led to many 2G Airtel and Vodafone-Idea customers making calls to Jio customers that are then missed, after which they become outgoing calls from Jio to other operators.
Jio insists, however, that the charge on outgoing off-net mobile calls will continue only until TRAI abolishes IUC.