Uncertain over IUC regime, Jio to charge for calls to other networks

Topics Jio | IUC | Reliance Jio

Jio will charge customers 6 paise per minute for voice calls, but will compensate them by giving free data of equal value
Reliance Jio on Wednesday said it would charge 6 paise per minute for voice calls made by customer to other networks such as Airtel and Vodafone Idea after indications that call connect charges may not end on December 31 as proposed earlier.

Current customers when they recharge as well those joining the Jio network from Thursday will have to top up with Rs 10 to Rs 100 to pay for interconnect usage charge (IUC). They will, however, get an equivalent amount of free data — 1 GB to 10 GB.

Jio will provide additional data entitlement of equivalent value based on IUC top-up voucher consumption. This will ensure no increase in tariff for customers,” Jio said.

This will effectively end one of Jio key disruptive strategies — free voice call. But, it will also help the telco save Rs 650 crore in the coming quarter. It had paid Rs 851 crore to Airtel, Vodafone Idea and BSNL last quarter as IUC.

Jio also said this new expense for customers would be a temporary one till telecom regulator Telecom Regulatory Authority of India (Trai) decides to abolish the IUC regime.

Sources said Jio was trying to send a message to the regulator — if the IUC regime continues it would not bear the costs. “It is our shareholders’ money that it being paid out. This is purely a regulatory charge that will be offloaded to the customer,” said the source.

Trai in 2017 had slashed the IUC to 6 paise per minute from 14 paise and had said this regime will end by January 2020. But, it has now floated a consultation paper to review whether the regime timeline needs to be extended.

Jio attacked both the regulator as well as incumbent operators and said there was continuing asymmetry between outgoing and incoming calls, with the former being far more than the latter.

This was because other operators had not invested adequately in the 4G network and 73 per cent of the customer base was still dependant on the 2G network. 

As the voice tariff on the 2G network was stiff, their customers often made missed calls on the Jio network. Jio customers, paying a lower tariff, called back, leading to more IUC charges for the service provider.

Jio said it got 250-300 million missed calls on its network every month, when it should have been 700 million minutes of incoming calls. Since its launch, Jio said it had paid its rivals Rs 13,500 crore as IUC in the past three years.

Other operators tried to shift the blame back to Jio and said its decision was taken hastily. They said Jio’s decision to reduce ringer time from 45 second to 25 seconds had led to more missed calls on its network. Incumbents have also done that now. Airtel said Trai’s review of IUC was in line with the regulator’s stated position on the matter — it had said the issue would be revisited based on factors such adoption of new technologies (their impact on termination cost) and traffic patterns. “Both these have not materialised. There are still over 400 million 2G customers from the poorest sections of society living in rural areas paying less than Rs 50 per month and who can still not afford to buy a 4G device. Second, there still is significant asymmetry of traffic,” said Airtel.

Vodafone said Jio had made the decision in haste and IUC was not a consumer pricing matter. “The announcement by one of the telecom service providers today to charge for calls made to other service providers to cover the termination charge of IUC is not only an action of undue haste but it also does not bring out the fact that interconnect is a settlement between operators and not a consumer pricing matter,” Vodafone Idea said in a statement.

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