The Telecom Regulatory Authority of India (TRAI), after more than a year of consultations with the industry, reduced the interconnect charge by more than 50 per cent starting next month and will eliminate the fee completely from 1 January 2020.
The mobile-to-mobile interconnect usage charge, or termination fee, will be cut from INR0.14 to INR0.06 ($0.0022 to $0.00094) starting 1 October, The Economic Times (ET) reported.
The move has drawn sharp criticism from India’s top mobile players as well as the parent company of Vodafone India and major Bharti Airtel shareholder Singtel.
After Vodafone Group CEO Vittorio Colao last month warned cutting mobile termination fees in India would unfairly benefit Reliance Jio, the operator said in a statement the fee reduction was “yet another retrograde regulatory measure that will significantly benefit the new entrant alone while adversely affect[ing] the rest of the industry”, ET reported.
The statement went on to say: “Unless mitigated, this decision will have serious consequences for investment in rural coverage, undermining the government’s vision of a Digital India. We are disappointed with this decision and are now considering our options to respond to it.”
Colao in August urged the government to resist pressure from Jio to cut the charge below the current level, which he said already stood below the cost of processing incoming calls.
Singtel, the largest single shareholder in Airtel, said in a letter to the telecoms minister before the TRAI decision that the cut is “likely to have adverse consequences for investment and long-term sustainability of the India telecoms sector. Ultimately, this would be to the detriment of customers”, ET reported.
Singtel Group CEO Chua Sock Koong said the reduction or elimination of the termination charge would “simply mean that there is less revenue available to mobile operators to finance both their existing and future investments”.
The Cellular Operator Association of India said members were planning to file a case in court against the regulator’s decision.
TRAI has argued that lower termination charges will benefit consumers because operators will have more retail price flexibility, according to an ET report.