A day after the Indian telecom regulator said the operators have urged it to fix a floor price for both voice and data, Cellular Operators' Association of India Director General Rajan S. Mathews on Friday said the matter was still at a discussion stage.
"The regulators world-over use various models which have various line items which they then look at to determine what is the price at which interconnect happens or which is used as a floor," Mathews told BTVi in an interview.
The COAI is the industry body for all GSM players. "The TRAI (Telecom Regulatory Authority of India) has a theoretical model of sorts. It is called Long Run Incremental Cost, that basically says let's look at an optimal network and it is not burdened with legacy stuff or by a particular technology.
"So there is that norm, the model that is used and the elements of cost are then put together and then the cost is determined. So it really takes care and should be agnostic in terms of whether it is 3G/4G or the combination of factors because it is looking at a model, that is a theoretical construct to determine what is the optimal prices," said the COAI Director General.
Talking about interconnection usage charges (IUC), Mathews said India is in a "calling party pays" regulatory regime. "We are in a 'calling party pays' regulatory regime. Previously, if you noticed both sides paid for a call - the person making the call, the person receiving the call. The regulator decided to go for where the calling party pays, the receiving party pays zero. This is called the work done principle."
In India, the cost of terminating a call in other network is 14 paise. "The receiving network does have to terminate that call to its citizen. That has a cost. We cannot say that let all of the revenue remain on the calling party and let there be no cost covered on the called party. So that is the regime, in a 'calling party pays' regime and that is why some cost has to be recovered... that is the role of the regulator to determine what is that optimal cost. "So, therefore, I think in all regimes worldwide where calling party pays, this is the structured approach. There is an interconnect cost... This cannot be for free," he added.