Trai defers zero-IUC regime for a year, to take effect from January, 2021

NEW DELHI: The telecom regulator has deferred by a 12 months implementation of the zero-interconnect utilization fees (IUC) regime that was slated to kick in from January 2020, giving some reduction to India’s older operators Vodafone Idea and Bharti Airtel who can now preserve getting some income on this account.

“For wireless to wireless domestic calls, termination charge would continue to remain 6 paise only per minute upto December 31, 2020…from January 1, 2021, onwards the termination charge for wireless to wireless domestic calls shall be zero,” the Telecom Regulatory Authority of India (Trai) stated in a launch Tuesday.

ET had first reported in regards to the deferment on its on-line platforms earlier Tuesday.

Trai’s regulation is a reduction for older carriers Vodafone Idea and Bharti Airtel — who had backed suspending the implementation of the BAK (invoice and preserve) or zero-termination cost regime — as they’re internet interconnect income earners. Reliance Jio Infocomm, which is a internet payer, had opposed any deferral.

Back in September, Trai had issued a dialogue paper, in search of views on deferring the implementation of the BAK (invoice and preserve) or zero-termination cost regime, on grounds that customers had been but emigrate utterly to knowledge calls coupled with the persevering with imbalance of voice visitors between operators.

“It may not be advisable to implement BAK from January 1, 2020, keeping in view inadequate adoption of 4G technologies by consumers and asymmetries in traffic,” Trai stated, issuing the regulation on Tuesday, including that sticking to the sooner BAK deadline “may affect level playing field amongst service providers, and in turn, effective competition in the market”.

Further, it stated, “in a capital-intensive sector (read: telecom) with a long gestation period, and where entry of new service providers in the short run is difficult, maintaining effective competition amongst service providers is necessary for ensuring affordable services to consumers”.

At current, interconnect cost is paid by the call-originating telco to the vacation spot service. But underneath the proposed BAK system, which was set to take impact from January, the call-originating telco, which additionally payments the consumer, would preserve the cash, thus making it a zero-IUC regime.

Rajan Mathews, director basic of Cellular Operators Association of India (COAI), the telecom foyer physique representing Bharti Airtel, Vodafone Idea and Jio, welcomed Trai’s regulation however stated the “industry would have liked it to be extended by another year, but even one year helps the industry”.

“We hope by the end of the year, Trai will once again review the matter. Second, two court cases are ongoing on this matter and we hope to hear some decisions regarding methodology of computing this charge,” Mathews advised ET.

A senior government at one of many older telcos although didn’t masks his disappointment, saying “IUC charges should be applicable as long as there is traffic asymmetry between service providers…this asymmetry is data-based and quantified monthly/quarterly, and to bring in a filter of time again (in this case, 1 year) is unwarranted”.

A modern deferment of zero-IUC regime means Bharti Airtel and Vodafone Idea will nonetheless obtain some IUC funds. But analysts anticipate Jio to profit, whatever the one-year deferment of zero-IUC because it’s now the voice minutes chief.

Nitin Soni, director (corporates) at international ranking company, Fitch, the truth is, stated Trai’s resolution to defer zero-IUC regime by a 12 months “is only mildly positive for net IUC earners Airtel and Voda Idea, given that traffic symmetry is fast changing, especially as Jio gains more subscribers”.

He additionally stated “Jio won’t really be impacted” by Trai regulation as “it has already started recovering IUC for calls to other telco networks”.

Rajiv Sharma, analysis head at SBICap Securities, although stated Trai’s regulation will profit incumbents as “the mere existence of IUC allows them to continue charging for voice services”.

Trai’s evaluate of the IUC concern comes a bit over two years because it had slashed the cost by 57% to six paise a minute in October 2017, and ordered its finish from January 2020. That resolution, which Trai had stated it could evaluate after a 12 months relying on adoption of recent applied sciences and its influence on termination prices, was then backed by Reliance Jio. This is since Trai’s resolution then enabled Jio, which had then just lately launched its 4G providers, to save lots of on IUC payouts to its then larger rivals Bharti Airtel, Vodafone India and Idea Cellular (Vodafone and Idea have subsequently merged). The older operators had then strongly protested, since they confronted a pointy income erosion, and appealed in opposition to the regulator’s order in court docket.

The telecom regulator, nonetheless, has dominated out any evaluate of the current 6 paise a minute interconnect cost, saying “it might not be significant to start out such an exhaustive and sophisticated train for the restricted remaining interval earlier than the (scheduled) implementation of BAK from January 1, 2021.

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