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TRAI move to review interconnect charge, may upset big operators

The Telecom Regulatory Authority of India (TRAI) has again opened the subject of interconnection charges, much to the consternation of big operators like Bharti Airtel, Vodafone Essar etc..

Interconnect charges are paid by the mobile operator from whose network a call originates to the mobile operator on whose network it ends, i.e., on whose network the called-party is present.

In case of small operators with relatively few subscribers, a large part of their subscribers will be calling subscribers of other, big networks. As a result, small operators end up paying large amounts of money to big operators as termination charge. Big operators have traditionally been in favor of maintaining the charge at higher levels.

The charges are currently decided on a per-minute basis, at 20 paise per minute. It was fixed at 20 paise assuming that that is the cost incurred by the ‘terminating operator’ in connecting the called subscriber to the call. According to industry sources, the actual cost incurred is lower, leading to benefits to those who have a large number of subscribers as they get 20 paise per incoming call, when spending a lower amount on actually completing that call.

As a result, big operators have been less favorable towards lowering termination charges. Indeed, in its response on the proposal, Bharti Airtel and Idea Cellular have already asked the Authority to include capital expenditure they have put in, and not justoperating expenses, in determining cost of terminating a call. In other words, they have called for a stiffer termination charge.

But TRAI, in a consultation paper issued a few minutes ago, said the current 20 paise per minute charge has to be changed due to the introduction of new schemes such as per-second billing. In per second billing, an operator may get just 5 paise from its subscriber for a 5-second call, but will have to pay 20 paise to the ‘terminating’ operator to whose network the destination number belongs.

“A number of important developments like starting of service by new service providers, introduction of per second pulse rate in various plan by many service providers have taken
place during period since last regime was introduced” in 2009, TRAI noted.

It also pointed out that in the era of high-speed services, consumers may choose to make voice calls through special software such as Skype and others. In such cases, the calls are not metered as calls and are considered simply as Internet data. For Internet data, however, there are no termination charges.

“To support operational efficiency in all the segments for coping up with changing nature of contents, changing nature of technologies, recent competition in tariff for voice calls and Court orders on the subject, it has become necessary to have a re-look at the present Interconnect Usage Charge regime,” it pointed out.

TRAI had recently pulled up big operators such as Airtel and Idea for charging seemingly higher termination charges for SMS from smaller operators compared to other big operators, calling such efforts discriminatory.

“Some of new service providers have also questioned the higher termination and carriage charge for SMS by existing service providers. They opined that by higher termination or carriage charges, incumbent service providers are making competitors services more costly,” it said.

It also pointed out that many operators are charging almost 20 paise as termination charge for an SMS, though there “may be a huge difference in cost of providing these two services.”

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