India’s new 4G operator Reliance Jio could pay as much as $360 million in interconnect charges in its first year of commercial operations, industry analysts predict.
That estimate from Bank of America–Merrill Lynch is based on Jio having 30 million customers using an average of 500 minutes of voice a month, the Economic Times reported. The call termination rate is INR0.14 ($0.0021) per minute.
A representative of a rival mobile operator told the Times that Jio’s interconnect fees should easily top $300 million.
The newspaper, however, cited another source who forecast Jio’s interconnect charges at just half that.
As the operator’s user base expands, the number of incoming and outgoing calls will likely balance, but the operator will be impacted in the first year as its calls will need to be terminated on circuit switched networks of the major players.
Not all IP-based
Adding to Jio’s problems is that since its 4G network is all IP-based and will use VoLTE for voice calls, a Fitch Ratings analyst noted it could face call drop problems as rival operators run a combination of 2G, 3G and 4G networks, which aren’t all IP-based, particularly in smaller cities and towns, the Times reported.
The debate over the size of the payment comes as Jio has accused rival operators of trying to undermine its long-awaited entry into the market by deliberately not providing it with adequate interconnection points. The country’s top mobile operators rejected its request for additional interconnect access, claiming they have already provided sufficient capacity.
The Cellular Operators Association of India (COAI) kicked off a row earlier in the month when it accused Jio of breaking the rules by trying to pass off commercial 4G service as a test to “potentially game policy features”.
Meanwhile, Telenor India, Aircel and Videocon Telecom have called for a sharp reduction in termination charges. TRAI cut the termination rate last year to INR0.14 per minute from INR0.20. The country’s top three mobile players – Bharti Airtel, Vodafone India and Idea Cellular — have challenged that reduction in court.
COAI has rejected a proposal made by the Telecom Regulatory Authority of India (TRAI) in a discussion paper last year to eliminate call termination charges since they are complex to calculate.