TRAI’s Call Connect Decision May Trigger Another Legal Wrangle
COAI’s preliminary calculations indicate that the total loss to the industry will be Rs 4,000-5,000 crore.
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The incumbent telecom operators will move court against telecom regulator TRAI’s decision to cut the fees for cross-network calls by more than half, industry body Cellular Operators Association of India said.
Interconnection usage charges for mobile-to-mobile calls have been reduced to 6 paise a minute from 14 paise starting October 1, according to a media release by the Telecom Regulatory Authority of India. From January 1, 2020, the charges will stand abolished.
The latest decision by the Telecom Regulatory Authority of India will hurt larger operators like Bharti Airtel Ltd. even as the new entrant Reliance Jio Infocomm Ltd stands to gain.
“This is quite a disastrous move for the majority of our members,” COAI Director General Rajan Mathews told BloombergQuint over the phone.
They have indicated that they will be moving court. By the way, the previous IUC order is also in the high court. So very sure this particular dramatic reduction in IUC charges will definitely end up in the court for adjudication.Rajan Mathews, Director General, COAI
An operator pays IUC whenever a rival provides access to its network to complete a call. Larger players like Bharti Airtel, with deeper rural networks and premium pricing, typically see significantly higher traffic of incoming calls than outgoing, according to a report by Kotak Institutional Equities in July. Which means, they are the net earners of interconnect charges. An aggressive player like Reliance Jio, with free voice calling, is a net payer, a reason why it wanted them abolished.
COAI’s preliminary calculations indicate that the total loss to the industry will be somewhere in the vicinity of Rs 4,000-5,000 crore and the gain to the other operator will be in the vicinity of Rs 2,000-3,000 crore, Mathews said.
“Clearly there is going to be a beneficiary to this reduction, and a substantial loss to the other major operator. So you can see why this will end up in the court,” he added.