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Trai to review regulatory regime for international call termination charges

The telecom regulator, in a paper issued Friday, has sought stakeholder views on whether a uniform ITC is still relevant or “if an alternate approach such as a forbearance regime” is required to give local telcos more flexibility to bilaterally ne...

ET Bureau|
Updated: Nov 08, 2019, 07.25 PM IST
The latest move by Trai comes at a time when the regulator has also initiated a controversial review of call connect charges for domestic calls, currently at 6 paise per minute.
KOLKATA: The telecom regulator has issued a discussion paper on overhauling the present regulatory regime of fixing uniform international termination charges (ITC) and moving to a variable pricing mechanism that would offer more leeway to local telcos to negotiate the best rates with the foreign carriers.

At present, global long-distance carriers pay ITC to local telcos that receive the incoming international calls.

The Telecom Regulatory Authority of India (Trai), in a paper issued Friday, has sought stakeholder views on whether a uniform ITC is still relevant or “if an alternate approach such as a forbearance regime” is required to give local telcos more flexibility to bilaterally negotiate these rates with global carriers and offer more compelling tariffs to consumers.

The sector regulator, in fact, has sought views on whether there is a case to migrate from “a regulated to a forbearance regime” for determining international termination charges, as in, leaving “the ITC rates (open) for negotiation” between India’s international long-distance operators (ILDOs) and foreign service providers.

“Most access service providers in India also have ILD operations…such negotiations to determine ITC rates (can transpire) between Indian and foreign service providers,” Trai said, adding that the scenario can give telcos the flexibility and space to ring in more “innovative tariff models that balance the interests” of both the local and foreign telecom operators.

A senior telco executive welcomed Trai's suggestion. "Allowing forbearance with the flexibility to bilaterally negotiate ITC with foreign carriers would allow local operators to provide greater value to their customers, more aligned with present market dynamics,” he said.

Trai’s review call comes less than two years after it had slashed ITC by 43% to 30 paise a minute in January 2018 to rein in the grey market for overseas incoming calls, a regulation that the older incumbent carriers had then wanted scrapped on grounds that it would trigger almost Rs 2,000 crore of combined revenue losses annually. Pure 4G carrier Reliance Jio Infocomm though had then backed the Trai move.

The deadlines for comments and counter-comments for Trai’s latest discussion paper are December 9 and December 23 respectively.

At press time, ET's queries to the Cellular Operators Association of India (COAI), which represents Bharti Airtel, Vodafone Idea and Reliance Jio Infocomm, went answered.

The sector regulator said an analysis of overseas long-distance voice traffic flows showed “the rate of decline of international incoming voice traffic through the carrier route has reduced after the ITC revision in January 2018”.

It added that “the average international settlement charges (ISC) -- the sum received by India’s ILDOs from foreign carriers – had reduced from 59 paise a minute in the quarter ended September 2017 to 42 paise a minute in the quarter ended March 2019”. This, it said, suggested that “while ITC had been reduced by 23 paise a minute in January 2018 to 30 paise a minute, the decrease in average ISC is only 17 paise a minute, implying that “ILDOs have not passed on the full benefits of ITC reduction to the foreign telecom carriers”.

Trai acknowledged there may be a view that the present ITC of 30 paise a minute puts local telcos “in a disadvantageous situation vis-a-vis foreign operators, given that “termination charges in many other countries is much higher”. But it also pointed out that there could be an alternate stakeholder view that “there is no extra cost involved in terminating international calls, and accordingly, the termination charges for international and local calls should be the same at 6 paise a minute”.

Another senior industry executive though dismissed the rationale of “equating international and domestic termination charges,” saying “this can never happen as ITC hinges on the prevailing foreign exchange rate, the volume of ILD traffic and bilateral negotiations between local telcos and foreign carriers”.

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