Telcos at war over planned interconnection usage fees
Incumbent telecom service providers such as Bharti Airtel and Vodafone Essar are at loggerheads with new operators such as Unitech Wireless and Sistema Shyam over the proposed revision of interconnection usage charge (IUC) regime.Updated: May 11, 2011 01:10 IST
Incumbent telecom service providers such as Bharti Airtel and Vodafone Essar are at loggerheads with new operators such as Unitech Wireless and Sistema Shyam over the proposed revision of interconnection usage charge (IUC) regime.
The Telecom Regulatory Authority of India (TRAI) is considering a reduction in IUC rates.
IUC is the charge that a telecom service company, where a call is originated pays to the company where the call is terminated. For example, if an Airtel subscriber calls a Vodafone subscriber, then Airtel will pay IUC to Vodafone.
IUC is different for different category of calls. Currently, IUC is 20 paise per minute for local calls.
Number of calls terminating in the networks of incumbent operators is more than the calls terminating in the networks of new operators as incumbent operators have more number of subscribers. This is the reason that incumbent operators are opposed to it.Both Vodaofne Essar and Bharti Airtel, in their comments submitted to TRAI, have argued for higher IUC saying that the regulator should consider all the costs while arriving at IUC.
Making strong case for lower interconnection usage charge, Unitech Wireless has recommended to TRAI that, “Today operators with dominant positions in the market in India offer very low on-net tariffs, even lower than the current termination rates. This is a strong indication that the current termination rates are above the marginal cost relevant for operators when setting prices.”