Reliance Jio Says TRAI’s IUC Review Will Result In ‘Windfall’ Gains For Old Telecom Firms
A pedestrian using a mobile phone walks past banners for Reliance Jio outside a mobile phone store in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Reliance Jio Says TRAI’s IUC Review Will Result In ‘Windfall’ Gains For Old Telecom Firms

Bookmark

Reliance Jio Infocomm Ltd. has termed as “retrograde” the telecom regulator’s move to review scrapping of interconnection usage charges.

The levy will continue to result in “windfall" gains for old telecom operators, punish the efficient ones and harm consumer interest, the Mukesh Ambani-controlled firm said.

An interconnection usage charge is levied by a telecom operator for completing incoming calls from rival networks. The Telecom Regulatory Authority of India was supposed to do away with IUC from Jan. 1, 2020, but recently released a consultation paper to see if there’s a need to revise the date for scrapping the levy, given the adoption of VoLTE (voice over long-term evolution) technology is much below expectation, and traffic imbalance—albeit reduced—still exists.

Consequently, Reliance Jio on Oct. 9 announced it will charge customers 6 paise per minute for voice calls made to rival phone networks, but will compensate them by giving free data of equal value.

In a 14-page letter to TRAI, Reliance Jio called the IUC review an "unwarranted exercise" which is an "act of utter haste" and inconsistent with its past approach and decision. It does not even deal with the issue of whether IUC from Jan. 1, 2020, should be 6 paisa or less, but merely with the question of deferment of the deadline keeping IUC intact at 6 paise per minute "which would be wholly irrational".

Reliance Jio, in the letter, alleged that any deferment of the sunset clause for IUC will end up rewarding "designed defaulters" or telcos who have deliberately stayed away from new and efficient technologies.

The latest consultation paper does not disclose any imminent need for the proposed review and reflects a premeditated mind, Jio said. It relies on "incorrect data" to draw its conclusions. The consultation paper is incomplete, and vitiated with "arbitrariness" and "non-application of mind".

"At a time when the situation is ideal to implement the Bill and Keep regime (meaning zero termination charge) from January 1, 2020, this retrograde step manifested in the form of the present consultation paper is neither warranted nor sustainable...," Jio said.

"As a sequence of these misconceived actions, pro-consumer operators like Reliance Jio, who have adopted the latest technologies are now required to revisit their tariffs and charge customers for voice services...such a step will be against consumer/public interest," Jio said in the letter.

Any regulatory intervention at this stage that envisages continuance of IUC will benefit the incumbents and cause irreparable hardship to Reliance Jio, the letter read.

Reliance Jio claimed its vast network has created innumerable opportunities for consumers and businesses in India and catapulted the country to among the Top 10 nations globally in mobile broadband internet access. TRAI's consultation paper seeks to "stifle the growth of the industry" in addition to being against consumer and public interest, it alleged.

The TRAI consultation paper also fails to note that the legacy operators have already recovered manifold the incremental network cost for voice calls on their 2G/3G networks over the last 14 years through IUC, Reliance Jio said in the letter. No new investments have been made for voice services for the last 5-6 years, it claimed.

Without naming Bharti Airtel Ltd. and Vodafone Idea Ltd., Reliance Jio argued that TRAI's consultation paper "conveniently ignores" that the two private operators supporting the extension of IUC have made it compulsory for its subscribers to get minimum prepaid recharges of Rs 24/month in order to receive incoming calls.

"This also evidences that the incumbents are disguising their tariffs, and are already charging heavily, even for incoming calls," it said.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.