TRAI Postpones Scrapping IUC Charges For Indian Telcos Till 2021

The IUC charges were slashed from 14 paise to 6 paise for carrier telcos back in 2017.

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The Telecom Regulatory Authority of India (TRAI) on Tuesday said 6 paise per minute charge on mobile calls be made on competitors' networks called Interconnect Usage Charges (IUC) will continue till 31 December, 2020.

This will come as a relief to Airtel and Vodafone, but Jio will most likely share its displeasure after this news. "For wireless to wireless domestic calls, termination charge would continue to remain as Re 0.06 (paise six only) per minute up to 31 December, 2020," TRAI said on Tuesday.

The charges were reduced to 6 paise with effect from 1 October, 2017 from 14 paise charged earlier and it was to become nil from 1 January, 2020. But this order pushes the deadline for one more year.


“From 1 January 2021 onwards the termination charge for wireless to wireless domestic calls shall be zero,” the regulator added.

Even the Cellular Operator Association of India (COAI) shared its relief after hearing about TRAI’s decision.

“This is a welcome step in the right direction. COAI has always maintained that in a CPP (Calling Party Pays) format that we follow in India, there should always be cost based IUC, in line with global practice. We look forward to continuing support from the government and regulator to address the severe financial stress in the telecom sector.”
Rajan S Mathews, Director General, COAI

There was an overwhelming majority who supported ending the IUC charges of 6 paisa on mobile calls termination, except two operators, Airtel and Vodafone Idea, at the open house held by Telecom Regulation Authority of India (TRAI) back in November.

It was hardly surprising to see both Airtel and Vodafone Idea oppose the ending of IUC charges from early 2020 onwards. Their recent quarterly results amounting to losses of over Rs 70,000 crore (with the addition of the AGR penalty, and interest on penalty) has raised concerns about the telcos operation in the near future.

IUC is generated when you make a call and your operator is charged by the interconnect partner for using its network. Interconnection charges apply when voice call terminates on another telco’s network.

For example, say you have an Airtel connection and you call a friend who happens to have a Vodafone connection. Vodafone’s network is used to route the call to your friend. Therefore, Vodafone will charge Airtel in such a case.

This all started on 19 September 2017, when TRAI decided to slash the Interconnect Usage Charge (IUC) on wireless-to-wireless devices by 57 percent to just 6 paisa per minute, which was to be eventually made free post 2020.

Since then, there have been clamours for the deadline to be extended beyond the stipulated 1 January 2020 timeline, and TRAI has agreed to the demands this week.

(With PTI inputs)

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