IUC becomes bone of contention between incumbent telcos and Jio

India’s top telcos are demanding a cut in licence fee, spectrum usage charge (SUC) and Universal Service Obligation Fund levy so that they can come out of the financial stress that they are in.

However, regarding the issue of interconnect charges (IUC), Indian telecom companies have come to a standstill with little chances of a consensus.

While incumbent telcos like Bharti Airtel, Vodafone India and Idea Cellular have demanded that IUC be raised, debutant Reliance Jio Infocomm has asked for it to be scrapped.

The IUC is a fee that one telco has to pay to the other telco on whose network a call terminates. Presently, it stands at 14 paise per minute, considered to be around half of an incumbent carrier's cost per call.

The reason why Jio wants it scrapped is that it relies on free offers to earn the loyalty of customers ever since it was launched in September last year, and believes that IUC is a subsidy provided to incumbent carriers.

If IUC is abolished, Jio would be befitted by reduction in its IUC payout, as it clearly has more outgoing calls to Airtel, Vodafone India and Idea.

None of the telcos wish to change their stand regarding the issue, since incumbent telcos have also urged TRAI to create a floor price for voice and data services, which Jio has opposed saying that it won’t ever charge for voice services for life.

If there is a floor price, Jio would have to end its free services, leading to a probability of customers moving back to their original carriers, which Jio wishes to avoid.