Choice Before Reliance Jio: Lose Revenue Or Go Back On Its Word
Reliance Jio Infocomm Ltd. lobbied hard to get the interconnect fee abolished. Now that the charge is likely to go, India’s biggest wireless carrier stands to lose.
Operators pay interconnect usage charges or IUC of 6 paise a minute every time their subscriber calls up a user on the rival network. Reliance Jio, which upended India’s telecom market with cheap tariffs, was the net payer of IUC as it offered voice services free.
Calls from Jio to other operators, according to its 2019 statement, resulted in 65 to 75 crore minutes of outgoing traffic from October 2017 to 2019. Billionaire Mukesh Ambani-controlled operator urged the regulator to abolish the fee even as Bharti Airtel Ltd. and Vodafone Idea Ltd. wanted the zero-IUC regime delayed.
The Telecom Regulatory Authority of India deferred it by a year since Bharti Airtel and Vodafone Idea still had 2G and 3G users. But now all three operators have VoLTE or data-based voice services, making it easier for TRAI to abolish the fee. And the regulator hasn’t updated its order yet with just a day left. If the TRAI doesn’t allow more time, the operators will have to stop charging IUC after Dec. 31 as the regulator has not offered any other update.
But starting October 2019, Jio started charging for voice calls that it promised to offer free citing recovery of IUC charges. It's now a net earner of interconnect fees.
“Jio has been compelled, most reluctantly and unavoidably, to recover this regulatory charge of 6 paise per minute for all off-net mobile voice calls so long as IUC charges exist,” the company said in a statement at the time. But it promised to scrap the charge once the TRAI abolished IUC.
Jio introduced 'all-in-one' plans in December 2019 that were priced 40% higher. While these offer unlimited Jio-to-Jio calling, they cap calls to other networks at 300 or 12000 minutes. Bharti Airtel and Vodafone Idea offer unlimited calls but charge more than Jio.
According to 2019-20 annual report of parent Reliance Industries Ltd., “IUC charge has led to a significant improvement in voice traffic mix as misusers of free voice services have left the network and Jio is now a net receiver of IUC.”
By comparison, according to an ICICI Securities report, Bharti Airtel was a net IUC payer in the quarter ended September.
Reliance Jio, Bharti Airtel, and Vodafone Idea have yet to respond to emailed queries.
For Jio, the choice is between taking a hit on average revenue per user by passing on the benefit to consumers. Or go back on its word to slash it and keep its tariffs unchanged.