Voda Idea seeks deferring of zero-IUC regime

KOLKATA: Vodafone Idea has urged the telecom regulator to defer scrapping interconnect charges from the planned January 2020 deadline, saying there will always be a cost of terminating a call, and majority of India’s mobile users continue to be on 2G and 3G platforms despite extensive 4G VoLTE network rollouts.

“There’s a need to extend the applicable date, and zero termination charge should not be applicable from January 1, 2020, as mobile termination is a cost-based charge, and can never be zero,” Voda Idea said in its submissions to Telecom Regulatory Authority of India (Trai), which had sought comments on a proposal to defer introduction of zero interconnect usage charges. Without suggesting a specific duration of IUC extension on grounds that termination costs will always exist, the company instead has urged the regulator to “determine the cost of terminating a call as part of its function under the TRAI Act”.

Pure 4G carrier Reliance Jio though has opposed the move to defer zero-IUC regime, saying Trai’s proposal was created to incentivise rivals, Bharti Airtel and Vodafone Idea, which are yet to fully upgrade their networks to 4G standards. Any deferment of zero-IUC regime, it said, would adversely impact Trai and the government’s credibility, besides reducing investor confidence in the telecom industry and discourage foreign and domestic investment.

Airtel has urged Trai to defer zero-IUC regime by at least three years from the scheduled January deadline, saying traffic symmetry between networks has not been achieved and over 400 million mobile users continue to use 2G networks.

Analysts at Kotak said Jio will benefit, regardless of the outcome of Trai’s consultation as a deferral would mean its off-net outgoing top-up revenues can become a meaningful source of operating income, while timely implementation of zero-IUC from January would translate in IUC payouts disappearing for the Mukesh Ambani-owned telco.

Jio is on course to becoming “a net IUC earner in the next few quarters,” said Kotak Institutional Equities, adding that even if the zero-IUC is deferred by two years beyond the deadline, the newest telco “would be in a position to recover some Rs 2,000 crore of cumulative net IUC costs that it might have to pay over the next 4-to-5 quarters”.

IUC is paid by call-originating telcos to the destination network. Jio is currently a net payer of IUC, while Airtel and Voda Idea are net recipients, underlining the reasons for their respective stands.

Voda Idea said “voice calls continue to be predominantly on circuit-switched networks,” and even after considering that “100% of Jio’s subscribers are on 4G VoLTE, 56% of (overall) mobile subscribers are on 2G/3G networks,” adding that demand for 2G devices is strong, and penetration of “VoLTE devices and traffic is much lower”.

The company said “its 2G/3G networks carry a huge amount of incoming off-net traffic, where a significant cost is incurred for call termination”. Though consumers are migrating to 4G, it said, a situation where such 4G adoption could justify closure of 2G/3G networks will take time.


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