Telecom Regulatory Authority of India (TRAI) has released its recommendations on Interconnection Usage Charges (IUC) for India mobile operators.
The 57 percent cut in mobile termination charges for domestic mobile to mobile call from Re. 0.14 per minute to Re. 0.06 per minute will benefit 1,000 plus million wireless subscribers across India from 1 October 2017.
Vodafone disappointed
Vodafone said it’s disappointed with this decision and is now considering its options in response to it. The Indian telecoms industry is already experiencing the greatest period of financial stress in its history. This is yet another retrograde regulatory measure that, unless mitigated, will have serious consequences for investment in rural coverage.
TRAI said a clear outlook for IUC would provide regulatory predictability and enable service providers to plan their networks and businesses accordingly.
TRAI noted that the cost of termination of calls will come down over a period of two years and telecom operators can absorb very small residual value in their tariff offerings.
TRAI said a Bill and Keep (BAK) regime for the wireless to wireless calls will be effective from the 1 January 2020.
TRAI may review the scheme for termination charge applicable on wireless to wires calls after one year from the date of implementation of the regulations.
A downward revision in the mobile termination charge is in line with the international trends. UK telecom regulator Ofcom says that there is a declining trend in mobile termination rates in the UK, starting from 24 pence per minute (ppm) in 1995 to less than 1 ppm in 2014.
The following Chart depicts the decline in mobile termination rates in the UK from 1995 to 2017.
After the reduction in the termination charge from Re 0.14 per minute to Re 0.06 per minute, the termination charge as a 31 percent of retail tariff would become about 20 percent, which would be in line with the international trends.
The reduction in mobile termination charge is likely to benefit phone consumers. The average outgo per outgoing voice minute declined from Re. 0.50 per minute in quarter ending March 2015 to Re. 0.31 per minute in quarter ending March, 2017 after implementing the IUC (11th Amendment) Regulations, 2015. Following this, mobile termination charge was reduced from Re. 0.20 per minute to Re. 0.14 per minute.
Earlier, TRAI followed the BAK method for prescribing fixed termination charges (i.e. wireless to wireline and wireline to wireline) as well as mobile termination charges from wireline (i.e. wireline to wireless) in order to promote investment in wireline networks.
TRAI noted that the performances of both wire-line business and wire-line broadband services improved subsequent to the implementation of zero termination charge for calls from wireline network.
TRAI said its initiative to boost the wire-line telephony and wire-line broadband segments by way of prescribing BAK regime for fixed termination charges (i.e. wireless to wire-line and wire-line to wire-line) as well as mobile termination charges from wire-line (i.e. wire-line to wireless) was successful.
TRAI will review International Termination Charge and Prescription of revenue share between Indian ILDO and access provider in the International Termination Charge.