Yesterday, on 19 September, TRAI reduced the termination charges, that an operator pays to another operator where the call lands, to 6 paise from existing 14 paise, and the new charges will be applicable from 1 October. Mathews said Trai "needs to be fair and transparent", and added lower charges will mean that companies will not have enough money to invest in new tech. The tariffs of telecom operators are based on data usage.
Idea and Vodafone India are already in losses, and are working out a merger to strike synergies.
Bhatia said that it has now become clear that what is the quantum of the cut in the IUC, and by when will it take place.
Now, even telecom interconnection charges will be scrapped.
The older operators, who are represented by the industry lobby body Cellular Operators Association of India (COAI), have been disappointed by Trai's decision to cut IUC rates to 6 paise per minute from14 paise.
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While a cutting the IUC rate, the authority added that the termination rates will be abolished from January 1, 2020. However, Bharti Airtel, Vodafone and Idea Cellular wanted MTC to be doubled, saying termination of incoming calls on their networks costs 30-35 paise per minute.
But Reliance Jio and Aircel, which are a little behind in the race will benefit from the new rates as now they'll be paying a lot less to other networks, which have more subscribers, for outbound calls from their networks. Similarly, the IUC is a relic of the era before telecom moved to packet data technology and relied on platforms where chunks of bandwidth were blocked when calls were made.
Kotak Institutional Equities, the institutional India brokerage, predicted that Jio, which now pays close to $1 billion in interconnection fees, will save $550-$600 million (30-33 rupees per user) annually as result to the new charges.
Overall, Jio and telecom users, both are victorious here. "It should have been implemented in 2014 as envisaged in the 2011 Report submitted by TRAI to the Supreme Court and will be six years too late", said Reliance Jio in a statement. "The incumbent operators have a history of opposing all the IUC regulations over the last eight years, but have not been successful in thwarting passing of the benefits of lower IUC to customers". "Operators would be able to offer consumers a wider variety of retail packages and tariff structures". This competition would also benefit the users.
The termination charges were first introduced in 2003.