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Airtel, Jio call for financial relief & incentives, differ over IUC

While Bharti Airtel and Reliance Jio, the two telecom majors of the country disagree over mobile termination charges, they stand united on data privacy for individuals and seek lower taxes, reduced spectrum usage charges.

ET Bureau|
Updated: Oct 16, 2019, 10.00 AM IST
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Jio, which is a net payer of IUC, has opposed any move to defer the zero-IUC regime, while Airtel and Vodafone Idea, which are net revenue earners, have backed it.
NEW DELHI: A fresh war of words over mobile call termination charges erupted on Day 2 of India Mobile Congress with Reliance Jio calling it an outdated concept associated with plain vanilla 2G networks while Bharti Airtel said it’s a key bilateral pact between telcos.

Both Jio and Airtel, though, were united in their call for financial relief and reforms for the sector through lower taxation, reduced spectrum usage charges, deferment of universal services obligation fund (USOF) levy and refund of input tax credit.

Interconnect usage charge (IUC) is a charge the telecom service provider of a caller pays to the telco on whose network the call terminates.

“The concepts of points of interconnect and interconnection are related to 2G and are outdated,” Jio president (networks) Mathew Oommen said. Telcos need to “invest in more efficient technologies such as 4G before venturing into 5G” or risk obsolescence, he said.

Airtel chief executive Gopal Vittal countered this, saying, “IUC, as in the cost of carrying calls, is a bilateral thing settled among operators… (and) a clearing house (concept) that has nothing to do with tariffs.”

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IUC has been a bone of contention among the private carriers and the telecom regulator. Two years ago, Telecom Regulatory Authority of India (Trai) had cut it to 6 paise per minute from 14 paise, and decided to scrap it from January 2020. But it recently sought views on deferring the implementation of zero IUC on grounds that millions of subscribers had still not moved to Voice over LTE (VoLTE), or a data-based network that was expected to lower the cost of generating a call, rendering IUC redundant.

Jio, which is a net payer of IUC, has opposed any move to defer the zero-IUC regime, while Airtel and Vodafone Idea, which are net revenue earners, have backed it. In fact, Jio has started charging for all calls made to rival telecom networks to recover the IUC it pays its peers, till the regulator scraps the charge. The Mukesh Ambani-owned operator has, in a letter dated October 10, slammed Trai, calling its IUC review process a “retrograde step” that would harm mobile users and punish efficient operators.

In the letter, Jio questioned Trai’s jurisdiction and reasons to tinker with original schedule for implementing zero-IUC from January .

Jio’s Oommen said consumers would be the most impacted by Trai’s move. “Folks who should be disappointed are customers as they need to continue to live with their 2G devices for a much longer time in many networks, which I think is a bad thing,” he said.

He also called for tax cuts. The sector is “taxed anywhere between 30% to 32%, which is very high, and definitely needs reform.”

On the stress in the industry, Airtel’s Vittal called for “consistent and enabling policy decisions” to reduce cost of doing business.

Both Airtel and Jio were also united on the need for drop in 5G spectrum prices.

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