TRAI reduces interconnect charges to 6 paise a minute from October 1

NEW DELHI: India’s telecom regulator Telecom Regulatory Authority of India (TRAI) said that it has reduced the interconnect usage charge (IUC) from October 1.

The regulator also said that the fee will be scrapped from 2020 and it would benefit to consumers.

Domestic Termination charges are the charges payable by a Telecom Service Provider (TSP) whose subscriber originates the call, to the TSP in whose network the call terminates, said TRAI in a statement.
Key features of the Regulations are as follows:
a) For Mobile to Mobile, termination charge has been reduced from 14 paisa per minute to 6 paisa per minute w.e.f. 1st October, 2017.
b) For other types of calls (such as wire-line to mobile, wire-line to wire- line and wire-line to mobile) the termination charge would continue to rernam zero.
c) From 1st January, 2020 onwards the termination charge for all types of domestic calls shall be zero.

Telecom operators not happy with the decision

"We are disappointed with this decision and are now considering our options in response to it. The Indian telecoms industry is already experiencing the greatest period of financial stress in in its history. This is yet another retrograde regulatory measure that will significantly benefit the new entrant alone while adversely affecting the rest of the industry as a whole. Unless mitigated, this decision will have serious consequences for investment in rural coverage, undermining the Government's vision of Digital India," said Vodafone Official Spokesperson.

“We are extremely disappointed with the latest regulation on the IUC, especially at a time when the industry is facing severe financial stress. The suggested IUC rate, which has been arrived at in a completely non-transparent fashion, benefits only one operator which enjoys a huge traffic asymmetry in its favour," said Airtel in a statement.

"The sharp drop in the IUC rate will only help transfer part of its cost to other operators, thereby further worsening the financial health of the industry. As part of an industry, which continues to be a critical driving force behind the economic growth in the country, we are genuinely dismayed by this decision," it said.

What is IUC?

Interconnection Usage Charges or IUC is a regulation made by TRAI in which the Phone companies pay one another Interconnection Usage Charges for using each other’s network to complete calls.

Currently, the domestic termination charge is at Rs 0.14 per minute and IUC is one of the main sources of income for telecom companies like Airtel, Vodafone and Idea Cellular and now these are facing tough competition in market from Reliance Jio.