Telecom firms divided over usage charge

The regulator recently  floated a consultation paper seeking industry’s opinion on removing the IUC or mobile termination charge hoping that this would help telecom service providers reduce tariff further benefiting the consumers.

New operators like Uninor,  Sistema Shyam, and CDMA service providers welcomed the suggestion while old operators—Airtel, Vodafone Essar and Idea—who have around 80 per cent market share, have opposed the move.

The IUC is the charge an operator from whose network the call originates has to pay to the operator on whose network the call ends. For example, if a BSNL subscriber calls an Airtel subscriber, then BSNL will pay IUC to Airtel.

Doing away with the termination charge is likely to bring the mobile tariffs down. The IUC varies from different calls like 20 paise per minute in local calls and 65 paise per minute to carrying STD calls.

 The regulator had last reviewed this charge in March 2009 and reduced it to 20 paise per minute from the earlier 30 paise.

The reason for opposition by old operators is that the number of calls terminating in the networks of old operators is more compared to that of new operators. Both Bharti Airtel and Vodafone Essar in their comments submitted to Trai have argued for higher IUC saying that the regulator should consider all the costs while arriving at IUC.

According to the company this will ensure “no operator makes any losses in extending interconnect services to another operator” and also guarantee that no mobile phone firm “makes any undue gains by charging more than what it costs.”

The Association of Unified Service Providers of India has, however, urged regulator to cut all components of interconnect charges.