Reliance Jio announced it will start charging customers for outgoing calls, after India’s regulator backtracked on a plan to eliminate interconnect usage charges (IUCs) at the beginning of 2020.
IUCs are fixed by Telecom Regulatory Authority of India (TRAI) and are currently set at INR0.06 (less than $0.01) per minute. The fees were scheduled to be scrapped 1 January 2020.
In a statement, Jio said it would levy the fee on calls to other networks until TRAI makes good on its plan. However, incoming and calls to other Jio users won’t be subject to the fee. Landlines are also excluded.
The operator said it has paid nearly INR135 billion to Bharti Airtel and Vodafone Idea in net IUCs while offering free voice to customers.
TRAI is reconsidering the move to a free IUC regime after the latter pair complained eliminating IUCs would hit their top-line, as the charges are a key revenue source. This would put additional strain on an industry already facing declining profitability and a huge debt burden.
A recent consultation paper suggested TRAI reassess the timeline for scrapping termination fees, with a one-year extension being considered.
Airtel said Jio’s move is designed to “force IUC to be brought down”, The Economic Times reported.
Jio argued a review is necessary because the country still has more than 400 million 2G customers who can’t afford a 4G handset, and there is significant asymmetry between inbound and outbound calls between operators.Subscribe to our daily newsletter Back