Jio's Mathew Oommen says IUC concept outdated
"The concept of points of interconnect and interconnection are related to 2G, its outdated," said Mathew Oommen, president, Jio.
The No 1 carrier by subscribers, which has started levying additional charge of 6 paise per minute for interconnect usage charges (IUC), said that it chose to do so to be transparent with customers while adding that customers would be disappointed with the telecom regulator’s move to relook at the IUC regime.
“I absolutely believe that the sector needs some reform because I think the sector is tax anywhere between 30 to 32%, which is very high. GST is at 18%, AGR is 8%, 5% is USO Fund, which is Rs 50,000 crore. Should we not defer any more USO taxation, till capital efficient use of that Rs 50,000 crore is done? It is sitting there doing nothing when they industry can very well use that money to jumpstart on many of the India centric activities,” Jio’s president -networks, Mathew Oommen said.
When asked whether the carrier was disappointed with the Telecom Regulatory Authority of India’s move to reconsider the implementation of the interconnect charge, Oommen said, the consumers would be the ones most impacted. “I think the folks who should be disappointed are the customers because 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.
As part of the policy reforms for growth of the sector, Oomen said that the government should refund Rs 35,000 crore input tax credit under the goods and services tax (GST), besides cutting the spectrum usage charge (SUC) to much below 1% from the present level of 3%, prospectively, and do away with additional taxes on top of GST, which can spur the industry that is reeling under the debt of Rs 8 lakh crore.
“So you're in a buying spectrum, then you pay GST and then you should not be paying any of the government license fees, or spectrum fee,” Oommen said, highlighting the issue of taxation at multiple levels. “The finance minister has announced that she's looking at the entire GST structure… as an industry, we will have to participate fully in that engagement and make sure that the issue is addressed once and for all.”
Oommen flagged that the government needs to make available 5G spectrum at the right price, time and with adequate predictability, and underlined the need for fibre proliferation which he said went hand in hand with 5G spectrum.
He termed IUC as an outdated concept and that the industry should increase investment into 4G networks, before venturing into 5G, while adding that it was 2G users on incumbents networks that were on the lower end of the pricing spectrum that were already under duress and were being made to be under more duress at the expense of maintaining a 2G technology.
"The concept of points of interconnect and interconnection are related to 2G, its outdated. If you don't invest we will become obsolete and industry will become obsolete. We still have 400 million users that are digitally unconnected," he said, adding that there should be enough incentives from a policy level for carriers to move to an all IP network, which means shutting 2G and 3G.
On rival telcos' comments on tariffs being unsustainable, Oommen said that unless operators converge their networks, they will not be able to lower their operating costs. "We live in a data world and not voice world. Operators have to converge networks, so that their operating costs (reduce)," he added.
Oommen added that India can create it’s own Indigenous 5G ecosystem at far lesser cost than traditional or incumbent OEMs leveraging ORAN, making India self sufficient.
"I have heard many industry stalwarts in India tell me that it will take us billions of dollars to create the 5G ecosystem in India. If Chandrayaan can take hundreds of millions and not billions to get to the moon... Being well versed with RAN, we can as India do this in tens and hundreds of millions of dollars, not billions of dollars, leveraging Open Source and ORAN so that we are indeed self sufficient and not be overtly reliant on only global IPRs and allowing us as India to have sufficient control in terms of IPR," he said.