Reduction in mobile call connection charges will have an adverse impact on investments and sustainability of the telecom sector in the country, Singapores telecom major SingTel said in a letter to communications minister Manoj Sinha. It is a negative for incumbent operators like Bharti Airtel and Vodafone because being bigger operators a large chuck of calls will be terminating on the networks of Bharti Airtel and Vodafone. The IUC will be 6 paise per minute from October 1.
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.
Telecom Regulatory Authority of India (Trai) said that the termination charge will be completely eliminated from January 1, 2020.
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Reliance Jio had said in a presentation to Trai recently that telecom operators gained to the tune of Rs 1 lakh crore from IUC.
Reliance Jio, which has built up a subscriber base of 128 million since it started commercial operations last September on the back of its offer of free voice calls, had wanted the interconnect usage charge (IUC) cut to zero.
The older telecom players are expected to move court to challenge Trai's decision as it threatens to suck out a massive chunk of their revenues. 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. However, TRAI has been in support for reducing IUC charges off late.
"Lower termination charges are, therefore, likely to benefit consumers overall (both fixed and mobile) because operators will have greater retail pricing flexibility". Since the rule bars operators from charging their customers for receiving calls, the interconnect usage charge was allowed as a way to recover the cost of incoming calls.