Telcos up in arms against Trai’s move to cut IUC

The Cellular Operators' Association of India (COAI), the top body of telecom service providers, have appealed directly to the Narendra Modi-led NDA government against the move by the Telecom Regulatory Authority of India (Trai) for a steep cut in interconnection usage charge (IUC).

On Tuesday, Trai asked telcos to reduce IUC or mobile termination charge (MTC) to 6 paise per minute from the existing 14 paise with effect from 1 October. COAI – which represents operators including Bharti Airtel, Vodafone India, Idea Cellular and Aircel as well as new entrant Reliance Jio Infocomm - termed the move as disastrous and anti-consumer.

Notably, there is something of a schism in the COAI as Reliance Jio is in favour of a cut in IUC, from which it would benefit.

''This is quite disastrous and has come at a time when industry is reeling under pressure. Government should step in to address IUC, and augment the financial health of the sector as it [the government] takes 30 per cent of every rupee,'' COAI director general Rajan S Mathews told ETTelecom.

Incumbents excluding Jio currently have a debt burden of more than Rs4.5 lakh crore, ET points out.

Mathews said this was a time to took into reduction in spectrum usage charge (SUC) and license fee, and bringing Goods and Service Tax (GST) down to 2 per cent, in addition to help in debt reduction.

The new IUC regime, according to him, will discourage telcos from making investments in networks for the benefit of consumers.

''There is only a finite amount of money and resources available with telcos and when it gets diminished, we would be unable to invest in rural network and quality of services including call drops may go for a toss,'' Mathews added.

Top operators such as market leader Bharti Airtel, Vodafone India and Aditya Birla group's Idea Cellular are now planning a legal battle against Trai.

Idea Cellular, which according to analysts would take a bigger hit than others, said in a statement, ''The proposed IUC reduction is a body blow to all operators who depend upon fair, equitable, and transparent regulation to encourage and sustain reinvestment in the sector.''