Old, new telecom operators spar over termination charges

Old, new telecom operators spar over termination charges

Termination charges, a part of Interconnection Usage Charges, are a levy paid by one operator to another on whose network a call ends. Any change in it has an impact on mobile tariffs.

As per the cost model submitted to Trai for calculation of IUC, Vodafone has suggested that termination charges should be close to 30 paise a minute, compared to 20 paise at present.

The country's largest telecom operator (by subscriber base), Bharti airtel, has not suggested a rate, but has said the charge "needs to be calculated keeping in mind the international best practices."

Bharti has suggested that the calculation of IUC needs to be done in accordance with the directions of TDSAT and that capex should be taken into consideration, since the industry is highly capex-intensive.

While old operators have suggested revising the interconnection usage charge (IUC) upward, taking into consideration various factors like high infrastructure costs, newer operators are of the view that the charge should be lowered to help further growth of the industry.

Anil Ambani-led Reliance Communications, which offers both CDMA and GSM services, has suggested a termination charge of 6 paise.

New operator Unitech Wireless, which offers services under the Uninor brandname, has suggested an FL-LRIC (Long-Run Average Incremental Cost)-based voice termination rate of 18.3 paise and a pure LRIC-based voice termination rate of 7.7 paise.
Often, IUC changes affect consumer tariffs. A lower IUC could mean lower tariffs for the end consumer.

Termination charges contribute significantly to the revenues of players, especially old operators.

Trai had sought comments from operators on the rate IUC should be charged at and whether the time has come to abolish it.

The issue of IUC has been a bone of contention between new operators and incumbent players for long now. In view of over 90 per cent of subscribers registered with old operators, they have been opposing any move to do away with termination charges, while the new operators are supporting the idea, saying this would give them a level-playing field.