TRAI Cuts Interconnect Fee to 6 Paisa: What Does It Mean for You?

In all likelihood, a cut in the IUC means that the consumers will have to pay less.

Updated19 Sep 2017, 04:22 PM IST
Tech News
2 min read

The Telecom Regulation Authority of India (TRAI) has decided to cut the IUC (Interconnect Usage Charges) to 6 paisa for mobile to mobile connections with effect from 1 October as opposed to 14 paisa which telecom operators were charging earlier.

What’s better for consumers is that post 1 January 2020 there will be no more IUC for all domestic calls.

Ever since Reliance Jio stepped into the arena, it’s been a nightmare for other telecom operators like Airtel and Vodafone. Well, things are about to get worse for these telcos as the Telecom Regulation Authority of India has slashed the interconnect usage charges (IUC).

IUC is the fee which various telecom service providers (TSP) pay each other, while connecting calls from one operator to another.

In all likelihood, a cut in the IUC means that the consumers will have to pay less than what they are already paying.

However, this move could lead to telecom operators like Airtel and Vodafone to increase call charges to make up for the losses they incur through this move.

This may also force the operators to switch to VoLTE technology as soon as possible.

Current IUC rates as proposed by TRAI.
Current IUC rates as proposed by TRAI.
(Photo: TRAI)

What is Interconnection Usage Charge?

A diagram representing interconnection usage charges from originating network to terminating network.
A diagram representing interconnection usage charges from originating network to terminating network.
(Photo: The Quint)

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.

Current Interconnect rates recommended by TRAI. Post 1 October, the IUC will be slashed to 6 paisa.
Current Interconnect rates recommended by TRAI. Post 1 October, the IUC will be slashed to 6 paisa.
(Photo: TRAI)

Telecom giants like Airtel, Vodafone and even Idea Cellular had asked for the IUC to be raised further.

Airtel, the country's biggest telecom, had an IUC revenue of around Rs 10,279 crore in 2016. They earlier proposed the rate to be hiked to over 30 paise per minute to meet the "actual cost" of supporting the call termination network.

Reliance Jio, on the other hand, believes that the IUC should be brought down to half of what it is. Jio describes IUC to be “an artificial barrier created by incumbent operators with legacy technologies”. This is a big win for Jio.

The IUC is an indirect expense that has to be borne by the consumer, and with this move by TRAI, that expense might get a bit lighter on your pocket.

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Published: 14 Aug 2017, 11:32 AM IST
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