Call termination charge: Jio, RCom say cost reduction should benefit customers; others disagree

New Delhi: Sharp differences have emerged among telecom operators over call termination charges with Ambani brothers opposing the levy, while incumbents Bharti Airtel, Idea Cellular and Vodafone maintained it is needed to encourage investments mainly in rural areas. In response to Telecom Regulatory Authority of India’s (Trai) consultation paper on review of interconnection usage charges, Mukesh Ambani-led Reliance Jio, Anil Ambani-promoted RCom and Videocon have asked the regulator to abolish call termination charge, arguing that it makes phone call rates expensive for consumers and advent of new technologies are reducing cost of operations. “Continuance of IUC, which is only a subsidy for inefficient network, will prevent operators from moving to the newer technologies besides keeping the cost of service at a very high level which only results in higher cost to the consumer,” Reliance Jio said in its submission. [caption id=“attachment_3042804” align=“alignleft” width=“380”]  Logo[/caption] On the other hand, dominant players – Sunil Bharti Mittal-led Bharti Airtel, Aditya Birla group firm Idea and Indian arm of British telecom major Vodafone have favoured levying of call termination charge to encourage investments in the country specially rural area where people spend less. “We support a cost-based termination charge, enabling all TSPs to recover the legitimate cost of the termination of a call on their network from other operators. Such a regime is essential to protect and increase network investments,” Airtel said. Interconnection is must among telecom networks for transmitting phone calls from one network to other. At present interconnection charges (IUC) are paid by one telecom operator to another for connecting call made by its subscriber to dialled number. These charges add up to determine phone call rates. IUC is determined based on the cost incurred by telecom operators in transmitting a call. At present, the termination charges for a mobile to mobile local and national long distance call is pegged at 14 paise per minute while the termination charges for international incoming call to wireless and wireline stands at 53 paise per minute. “Any change from a cost based regime will adversely impact our huge investments in the rural areas and belie the promise of cost based approach on the basis of which these investments have been made,” Vodafone said. The Trai floated a consultation paper to review phone call termination charges in August following a complaint by industry body COAI against state-run BSNL’s fixed mobile telephone service. The service proposed to allow its customers make phone calls within the country using their landline connection with help of a mobile application even when they are abroad. The Cellular Operators Association of India (COAI) approached Trai against BSNL’s service alleging that the service will bypass international termination charge (ITC) of 53 paise per minute levied on any call coming from abroad and further bypass other call termination charge by routing call from its landline network. In a surprise move, BSNL not only favoured continuance of ITC but also said that it should be levied in US dollar terms so that rates are conveniently settled with international telecom operators. BSNL asked Trai to make it one cent which is valued around 67 paise at present. New telecom operator Telenor, which operates in six out of 22 telecom circles, also favoured imposing of call termination charges. “We do not support introduction of Bill and Keep, an approach which we believe is particularly ill-suited to a country such as India which has a calling party pays regime coupled with large differences in footprint and traffic imbalances between mobile operators,” Telenor said. Incumbent telecom operators also questioned Trai move to review termination charges and said that even the mobile termination rate of 14 paise per minute for an incoming call has been challenged by them in the court. Industry platforms Broadband India Forum (BIF) and ITU-APT Foundation too favoured imposing of call termination charges. “In Rural India , where income levels are much lower, customer’s incoming calls are 65-70 percent of the total calls. Hence if Mobile Termination Charges does not cover the cost of termination, there is no incentive for the operator to roll out the networks at great cost and much difficulty,” BIF said. ITU-APT Foundation of India cited presence of huge networks build on old technology in which operational cost is high as one of reason for continuation of termination charges. “It is submitted that the present telecom network in India is mainly circuit switched and therefore, the termination charge should be determined on cost based and work done principle,” ITU-APT Foundation of India said. Telecom operators Tata Teleservices, Aircel and MTNL refrained from submitting their comments. (_Disclaimer: Firstpost is part of Network18 Media & Investment Limited which is owned by Reliance Industries Limited)_