Idea Cellular: Lower IUC will turn all telcos, barring Jio, sick

Warning that any move to lower the inter-connect usage charges (IUCs) would turn the entire telecom industry sick barring Reliance Jio, Aditya Birla Group-owned Idea Cellular on Thursday urged the Telecom Regulatory Authority of India (Trai) to put industry call minutes into two buckets for a “correct” assessment of costs and then decide on the merits of reducing IUCs.

In a written communication to the telecom regulator, Idea Cellular’s managing director, Himanshu Kapania, said the Trai should bifurcate current industry minutes into those terminating on the voice over long-term evolution (VoLTE) networks used by Jio, and other networks like 2G/3G and 4G used by Idea, Vodafone and Bharti Airtel.

“Then, based upon cost data and weightage between the two types of network terminations, arrive at the IUC using fully allocated costs (FAC) or long-range incremental cost plus (LRIC+) models. Of this, the FAC has found favour in all countries where the large network investments still lie ahead. This is especially true in the Indian context, where the government needs to encourage telecom expansion in rural areas,” the communication by Kapania to Trai said on Thursday.

The letter said Trai must review the weight of voice traffic volume between the two types of networks for a year and take the previous three months’ traffic data as the basis. “The respective costs of VoLTE and other networks can make do with a lower frequency of review once in 36 months,” the letter said.

A letter by Aditya Birla Group Chairman Kumar Mangalam Birla last month asked Trai to be more “transparent” on how it plans to calculate IUC between wireless phone operators. The letter said reducing IUC would help only one operator (read Jio) and lead to further financial stress in the sector.

Another proposal by Birla said every operator must segregate the minutes terminating on its network into two groups: Calls originating from Jio and calls originating from other networks. The Trai, Birla said, should then separately determine IUCs for both types of networks using either FAC or LRIC+ model.

Idea’s communication to Trai comes after reports that Trai plans to reduce IUC to seven paise per minute and then to zero per minute from the current 14 paise per minute. The earlier move to reduce IUC to 14 paise per minute has already been challenged by Idea in Gujarat High Court and by Airtel in Delhi High Court. Both cases remain pending.

After almost a year of operation, the Jio network gets five per cent of incoming calls. IUC is levied on incoming calls.