IUC Review: Reliance Jio To Charge Users 6 Paise Per Minute For Calls To Rival Networks

Forced by regulatory uncertainty over review of sunset clause for call termination charges, Mukesh Ambani's Reliance Jio Infocomm Ltd. on Wednesday announced it will charge customers 6 paise per minute for voice calls made to rival phone networks, but will compensate them by giving free data of equal value.

In a statement, Jio said the 6 paise charge will remain in place till the time telecom operators are required to pay rivals for mobile phone calls made by their users to other operators' network.

The Telecom Regulatory Authority of India in 2017 had slashed the interconnect usage charge to 6 paise per minute from 14 paise and had said this regime will end by January 2020. But it has now floated a consultation paper to review whether the regime timeline needs to be extended.

Since voice calls on Jio network are free, the company had to bear the Rs 13,500 crore payment made to rivals Bharti Airtel Ltd. and Vodafone Idea Ltd. To recover losses created by the TRAI move, the company has decided to charge customers 6 paise per minute for every call they make to a rival's network.

This will be the first time that Jio users will pay for voice calls.

Currently, Jio charges only for data, and voice calls to anywhere in the country and to any network are free.

"The consultation paper has created regulatory uncertainty and therefore Jio has been compelled, most reluctantly and unavoidably, to recover this regulatory charge of 6 paise per minute for all off-net mobile voice calls so long as IUC charges exist," the statement said.

For all recharges done by Jio customers starting Wednesday, 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.

"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," Jio said.

Jio said it has, in last three years, paid other operators like Airtel and Vodafone-Idea nearly Rs 13,500 crore as net IUC charges.

Airtel’s Response

Telecom operator Bharti Airtel Ltd. on Wednesday alleged that Jio's decision to levy 6 paise per minute on voice calls to rival phone networks is geared to "force IUC to be brought down", and said ongoing review of call connect charges or IUC is consistent with TRAI's previously-stated intent.

Without naming Jio, Airtel in a statement said, "one of our competitors has imposed a rate of 6 paise for all off net calls made to other operators to cover the termination charge of IUC (Interconnect Usage Charge). They have gone on to suggest that TRAI has re-opened this issue".

Airtel argued that the review was, in fact, in line with TRAI's stated position on the matter in 2017 where it had made it clear that the issue will the revisited based on factors like adoption of new technologies (their impact on termination cost) and traffic patterns.

"Both these have not materialised. There are still over 400 million 2G customers from the poorest sections of society living in rural areas paying less than Rs 50 per month and who can still not afford to buy a 4G device. Second, there still is significant asymmetry of traffic," Airtel said.

Airtel rued that even the current rate of 6 paise is significantly below the real cost of completing the call.

"On Sept. 19, 2017, when TRAI reduced the IUC from 14 paise to 6 paise and proposed a move towards Bill and Keep (zero IUC rate) with effect from Jan 1, 2020 they had specifically mentioned the following...The authority, if deems it necessary may revisit the aforementioned scheme of termination charge applicable on Wireless to Wireless calls after one year from the implementation of the regulation," Airtel statement recalled.

Airtel further noted that the telecom industry is in a state of deep financial stress since the last three years with several operators having gone bankrupt and thousands of jobs having being lost.

"The IUC is determined based on the cost per call. Given the massive 2G customer base in India the cost of the call at 6 paise is already significantly below the real cost of completing the call," it added.

Airtel said, "clearly, this off net charge being levied, therefore, is to force IUC to be brought down despite the heavy burden it puts in the receiving network. We are grateful that this very timely consultation paper to reassess IUC has been issued By TRAI," Airtel said.

Vodafone Idea Response

Vodafone Idea Ltd. called the move by Jio was hasty.

“The announcement by one of the telecom service providers today to charge for calls made to other service providers to cover the termination charge of IUC is not only an action of undue haste but it also does not bring out the fact that interconnect is a settlement between operators and not a consumer pricing matter,” Vodafone Idea said in a statement.

It added that TRAI’s call for a consultation on IUC keeping in mind the continuing asymmetry in traffic and in line with its earlier stated position on the matter.