Reliance Jio vs Airtel: Why operators are fighting over interconnect usage charges

Yolanda Curtis
October 10, 2019

Telecom operator Vodafone Idea termed Reliance Jio's plan to start charging 6 paise per minute for outgoing calls to rival network as "an action of undue haste" and an attempt to distract attention from the need for urgent action to address financial stress in the sector.

"This huge missed call phenomena converts the incoming calls to Jio into outgoing calls from Jio to other operators".

In a statement, Jio said the 6 paisa charge will remain in place till the time telecom operators are required to pay rivals for mobile phone calls made by their users to other operators' networks.

More than 350 million customers of Reliance Jio will have to pay interconnect usage charge (IUC) of 6 paise per minute as India's largest telecom company by number of subscribers plans to recover such charges from its customers.

Jio's decision to charge for voice calls comes after the TRAI floated a consultation paper to review if the regime timeline needs to be extended.

Currently, Jio only charges for data and voice calls to anywhere in the country is free.

"In our view, its TRAI's call for a consultation on IUC keeping in mind the continuing asymmetry in traffic and in line with its earlier stated position on the matter", Vodafone Idea said in a statement.

Reliance, led by billionaire Mukesh Ambani, invested some $40 billion to launch Jio three years ago.

These charges are not applicable to calls made by Jio users to other Jio phones and to landline phones and calls made using WhatsApp, FaceTime and other such platforms. According to the Telecom Regulatory Authority of India (TRAI), the current IUC is priced at six paise per minute.

Jio says that on the confidence that IUC will be brought down to zero from 2020, Jio continued to pay IUC from its own resources to Airtel and Vodafone-Idea, while offering free voice to its customers.

"To compensate our customers for the cost of these additional IUC top-ups, we will offer additional 1GB of data for every 10-rupee spent, absolutely free".

IUC for mobile calls was reduced from 14 paise per minute to 6 paise per minute from October 1, 2017.

"Jio network receives 25 to 30 crore missed calls on a daily basis", it added.

The new rules will apply on all recharges done by Jio customers starting Wednesday.

However, TRAI has now started re-thinking whether to bring IUC down to zero or not, which has led to significant uncertainties for RJio which has paid almost Rs 13,500 crore as net IUC charges to the other operators over the past years.

Instead, the call back made by the Jio customers results in 65 to 75 crore minutes of outgoing traffic, said Jio. Since it did not charge its customers for voice calls, the company had to bear this entire expense.

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