Explained | Why Jio is charging 6p/min for non-Jio call

A sales person displays features of JioPhone as he poses for a photograph at a store of Reliance Industries' Jio telecoms unit. (Reuters photo)

Reliance Jio on October 9 announced it will charge customers six paise per minute for voice calls made to rival phone networks such as Airtel and Vodafone. The telecom operator, however, promised consumers to compensate them by giving free data of equal value.

In a statement, Jio said the six 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' network under the interconnect usage charge (IUC). 

What is Interconnect Usage Charge or IUC?
The interconnect usage charge or IUC is the amount that one mobile telecom operator pays to another operator when its customers make outgoing mobile calls to the other operator’s customers. At present, the IUC is six paise a minute.

Why is Reliance Jio charging 6p/min for non-Jio call?
Since the IUC continues to be levied, Jio was paying Airtel and Vodafone-Idea for calls made by its customers on their networks. In the last three years Jio has paid nearly Rs 13,500 crore as IUC charges to the other operators.

Until now, Jio has been paying IUC from its own resources, cutting through the company's profit. Thus, charging six paise a minute would help Jio save money to pay IUC to its rivals.

Also read — Your phone will have shorter ring time now; here's why

This will be the first time that Jio users will pay for voice calls. Currently, Jio charges only for data, and voice calls to anywhere in the country and to any network are free.

How did the rivals react?
Telecom operator Vodafone Idea termed Reliance move 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.

Without naming Jio directly in the statement, Vodafone Idea said that new announcement from the Mukesh Ambani led firm comes closely to the action taken recently to potentially hurt revenues of other operators with its recent unilateral action of reducing ringing time.

How will it affect customers?
Jio customers will be charged six paise per minute for making a call on rival networks. Thus, they will have to buy and recharge their balances through IUC top-up vouchers till such time that TRAI moves to zero termination charge regime. 

The IUC was originally proposed to be made nil from January 1, 2020, but the regulator is now reviewing the timeline.

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