Telcos should be satisfied with the interconnect charges TRAI has maintained in its internet telephony consultation

Most of the telecom industry not been happy with the direction of the consultation paper since its very beginning.

TRAI has issued recommendations for a framework to regulate app based internet telephony by telecom service providers. Highlights of the recommendations include not monitoring the quality of service, leaving it to market forces, assigning the same number to a subscriber for both cellular as well as internet services, and allowing consumers to use the network of any operator for internet telephony.

Image: Reuters

Image: Reuters

Most of the telecom industry not been happy with the direction of the consultation paper since its very beginning. The Cellular Operators Association of India (COAI) differs from the recommendations of the regulator on key aspects. One problem is allowing for internet telephony access on any other network but that of the operator, clarification on the numbering series used for internet telephony, security of the network, and interconnection charges are all concerns.

There is some confusion on what exactly internet telephony is, and even TRAI points this out in the recommendations. "The terms ‘IP Telephony’, ‘VoIP’, ‘Internet Telephony’ and other variants often generate confusion as there are many different definitions used by various organizations. Some use them interchangeably while others give them distinct definitions. Further confusion is caused by using the terms to refer to both the IP-based technologies and the services that are enabled by these technologies. Internet Telephony can be deemed to be a subset of Voice over IP, in the sense that, when voice is carried over an IP network it can be termed as Voice over IP."

An easier way to understand is that the recommended regulations apply only to licensed telecom service providers, and not over the top applications that support voice calls such as WhatsApp, Viber or Google Duo. TRAI started the entire process of a consultation for internet telephony in May 2016, after the furore created by BSNL when it allowed international roaming consumers to make local and STD calls from their landlines back home through a mobile application.

The COAI had written to the then Telecom Secretary JS Deepak, that the fixed mobile convergence service offered by BSNL violated interconnection rules, leading to losses for the operator. "We, therefore, request DoT to kindly take proactive steps to prevent such illegal routing and strongly suggest that DoT must direct all respective licencees to not terminate Internet Telephony calls by misusing the interconnecting links," COAI Director General Rajan S Mathews had written. Reliance Jio, although a member of the COAI, had said "Reliance Jio has a divergent view on the matter."

Even before the internet telephony consultation was started, the problem for COAI had been the loss of revenue through a lack of interconnect usage charges (IUC). When TRAI initiated the process of consultation, for a holistic set of regulations to govern internet telephony, one of its stated goals was to address the issues of interconnection usage charges. "It eventually has to be decided what aspects of conventional telephony regulation should apply to internet telephony service. To encourage internet telephony services in the country, issues such as allocation of telephone numbers, interconnection, interconnection usage charges and access to emergency service need to be addressed urgently," TRAI had said.

Yet, these matters were not comprehensively addressed in its recommendations.

In its recommendations, the telecom authority has indicated that it feels there is no need to introduce separate interconnection charges for internet telephony, and any changes can be introduced in future clarification or amendment. According to the recommendations, "The Authority observed that present recommendations are limited to provisioning of Internet Telephony by access licensees and they are handing over Internet Telephony call to other service providers like any other voice call and therefore there is no need to prescribe separate Interconnection framework at this stage and the extant POI framework and Interconnection Usage Charges may continue for provision of Internet Telephony services also. Moreover, as mentioned in the paragraph 3.44, DOT has already stated that Internet Telephony service is akin to mobile service. However, if any change is required in the Interconnection regime , the Authority will issue separate amendment/clarification in this regard."

The consultation was bound to be problematic as it was premature and came at a time when a number of pressing concerns were not addressed, including the demand of Telcos for regulation of OTTs, which some operators consider a pre-requisite for any kind of meaningful regulations on internet telephony.

As expected, the Telcos are not happy with the recommendations, and maintain that a number of underlying issues are not addressed by the consultation. "The subject of internet telephony involves important issues such as the need for an underlying access network, separate numbering series, Interconnection, network security etc., which still need to be addressed", COAI Director General Rajan S Mathews told The Economic Times.

Interconnect usage charges has been a source of controversy in the telecom industry, even though experts have called for a total abolition of the IUC regime. In August this year, RNP Sinha, the former CMD of MTNL told CNBC-TV18, "The only solution is that you make it as bill and keep (B&K) and the IUC charges should be made zero, they should not be recovered (from the consumer) and they cannot be treated as source of revenue."

From 1 October, 2017, TRAI slashed the interconnect usage charges by half, to twelve paise per minute, taking a step towards getting rid of the charges entirely. The authority plans to take interconnection charges to zero by 2020. The move came as a jolt to incumbent operators such as Vodafone, Idea and Airtel, but was in line with the demands of the new entrant, Jio, which has always maintained that there should be no IUC. As expected, Airtel and Vodafone were vocal against the introduction of new rules, but Jio indicated that the consumers would benefit from the reduced charges. Arpita Pal Agrawal, Partner and Leader, Telecom Industry practice, PricewaterhouseCoopers India told IANS, "The IUC termination charge cut is not expected to provide any direct benefit to end customers. In the current hyper-competitive situation, most tariff packages already offer free voice calls."

The intense battle over IUC charges between telcos has moved on from domestic cellular charges to internet telephony and international calls. TRAI is in the process of formulating regulations for international call termination charges. COAI has demanded a six fold increase in international call termination charges, from the current 53 paise per minute to Rs 3.50 per minute.

In any case, the writing is on the wall. IUC is not a viable revenue stream, and are on the way to eventually becoming zero. Telcos in opposition cannot stand to gain much by repeatedly fighting for increased IUC.

Disclaimer: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

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