IUC cut to hit telcos' biz by Rs 5,000 cr, 2G calls to suffer: COAI

New Delhi: Regulator Trai's decision to cut call connection charge rate by more than half, if executed, will hit earnings of old mobile operators to the tune of Rs 5,000 crore in the current fiscal, industry body COAI on Wednesday said.

Rajan S Mathews, Director General, Cellular Operators Association of India (COAI), in an interview to PTI demanded that Trai should explain the calculation model it had used to arrive at the figure of 6 paise for the interconnection usage charge, which will be effective October 1.

The detailed methodology on which Trai's calculations are based is part of the explanatory memorandum to the regulations all of which have been placed in the public domain now, Trai Chairman R S Sharma today told PTI.

Mathews contended that the assumption of the Telecom Regulatory Authority of India (Trai) that all operators should move towards VoLTE technology is not practical as it will hit services for 2G users who account for 70 per cent of the total subscriber base in the country.

"In the last financial year, industry revenue from IUC at 14 paise was around Rs 10,000 crore. At 6 paise, we expect it to decline to Rs 5,000 crore," Mathews added.

VoLTE (Voice over Long-Term Evolution) is high-end and latest version of calls that are made on Internet-based networks.

Trai on Tuesday announced slashing of the mobile call connection charge to 6 paise a minute from 14 paise and said no rate will apply from January 1, 2020.

Established telecom operators have argued that every call on the network has a cost, and expenses of an incoming call on their network should be borne by the operator from whose network, the call has originated.

Trai has asked "why telecom operators are not migrating to newer technologies such as VoLTE" when clear demonstrable large differences exist in the cost of providing same services.

"Technology migration sounds good, but we have to look at practical dimensions of what happens in terms of incumbents. They don't have the same profile as Jio does. Jio can start with all 4G calls, but incumbents are forced to bear the cost of carrying their legacy," Mathews pointed out.

He said that in 2010 when spectrum was auctioned, the government had defined the service for which it has to be used and based on those requirements, Jio was bound to build a data network. But operators who purchased 3G at high price had to use other technologies.

At present, Reliance Jio offers entire phone call service using the VoLTE technology. Airtel has just started VoLTE-based calls and plans to expand it across India by the end of the current fiscal.

All operators, Mathews said, want to move to 4G network, but they cannot force customers using 2G services to move to 4G as most of them cannot afford 4G handsets.

"What am I going to do with 2G subscribers that I have had till 2014. They don't have a smartphone. They only have feature phone. If VoLTE calls come for delivery on 2G network, how am I going to deliver that call VoLTE to 2G is not possible unless you do what Trai did for broadcasting," Mathews reasoned.

Trai had mandated installation of digital set-top-boxes for watching cable television. He said JioPhone is also not affordable for many because of the deposit being charged to them. People can get JioPhone by paying Rs 1,500 as deposit, which will be refunded to them after 36 months.

"No body (2G customers) is willing to pay big amount upfront. Around 43 per cent of all top-ups are of Rs 10. Nobody is even willing to pay Rs 150 upfront," Mathews said.

He is of the view that if telecom operators start selling bundled handsets, they will have to pay licence fees and spectrum usage charge also on the price of phone.