Telecom Regulatory Authority of India has revised the IUC (Interconnect Charges) to 6 paise/minute from the existing rate of 14 paise/minute. The move was said to be implemented after the latest telecom operator, Reliance Jio had requested for the charges to be reduced and eventually scrapped in order to provide better and cheaper call rates to the customers. The latest notification by TRAI has mentioned that the rate will be reduced to 6 paise/minute starting October 1 and it will be completely scrapped from January 1st, 2020.
In its statement on Tuesday evening, TRAI stated “For mobile to mobile, termination charge has been reduced from 14 paisa per minute to 6 paisa per minute wef. 1st October 2017… From 1st January 2020 onwards the termination charge for all types of domestic calls shall be zero.”
IUC stands for interconnect charge and it is the fee which is paid by the telecom operator of the number from which a call is made and it is paid to the network operator which receives the call. Off late, this charge has been one of the biggest factors behind the earnings of telecom operators and since the launch of Reliance Jio, this was being highly debated because Jio provides all calls for free. The latest move by TRAI is set to benefit Jio the most, however, it has come as a setback to the existing telecom operators including Airtel, Idea and Vodafone. The existing operators have already been struggling because of the lowered revenue after huge cut downs in the prices of data packs and other telecom services.
The existing telecom companies were betting on an increase in the IUC since last few months. In their response to TRAI, the companies had stated that the current setup of cheaper data packs has hit them hard in the terms of revenue and wanted IUC to be increased to 30 – 35 paise/minute in order to recover the charges lost after cheaper data packs. However, TRAI has been in support for reducing IUC charges off late. One of the arguments given by TRAI on this included that the authority wanted to provide better and cheaper options to the customers to make phone calls and to remain connected.
In today’s statement, TRAI also stated that the new rates will allow the telecom operators to offer better call rates and packages to the customers and that will eventually increase the mobile usage among the lower income families. TRAI stated that the increased usage among the masses will help the telecom companies recover the losses incurred by reducing IUC charges.