TRAI announces drop in Interconnection Usage Charge (IUC)

Gwen Vasquez
September 20, 2017

According to PTI, TRAI on Tuesday said, "On the basis of comments received from stakeholders, in writing or during the open house discussion or during the workshop, the Authority has prescribed revised domestic mobile termination charges through these regulations".

The telecom regulator had reduced the interconnect charges in 2015 to just 14 paise a call, much to the chagrin of state-run entities BSNL and MTNL as it reduced their revenues drastically.

Telecom Regulatory Authority of India (Trai) said that the termination charge will be completely eliminated from January 1, 2020.

IUC stands for interconnect charge and it is the fee which is paid by the telecom operator of the number from which a call is made and it is paid to the network operator which receives the call.

Bharti Airtel's largest single shareholder Singtel has flagged its concerns regarding the potential move of the Indian regulator to scrap interconnect usage charge (IUC) to the government, saying that any move to reduce or scrap the interconnect charge would hurt investments into the telecom sector, and would be damaging to customers. Off late, this charge has been one of the biggest factors behind the earnings of telecom operators and since the launch of Reliance Jio, this was being highly debated because Jio provides all calls for free.

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An earlier report claimed, Reliance Jio, Reliance Communications, Aircel, MTNL demanded scrapping of the IUC regime and moving to the Bill and Keep (BAK) regime under which no operator raises such demand. The existing operators have already been struggling because of the lowered revenue after huge cut downs in the prices of data packs and other telecom services.

TRAI said these charges worked as disincentive for deployment of new technology such as VoLTE and migration to IP networks by operators, where there are no interconnection charges. "Operators would be able to offer consumers a wider variety of retail packages and tariff structures".

The interconnect usage charge for all types of domestic calls will be zero from 2020.

TRAI fixes IUC that has several components.

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