Ahead of the Telecom Regulatory Authority of India (Trai) closing the consultative process on the review of termination charges, Reliance Jio - a net payer of this rate - has decided to charge its consumers for calls made on other networks.
Though the move, which comes into effect on October 10, is contrary to the company's claims at its launch (when termination rate was higher at 14 paise per minute) that Jio consumers would not have to pay for domestic voice calls for life, the company on Wednesday said it's a temporary charge. It would remain in force till Trai does not move to zero termination rate from January 2020 as announced earlier.
To neutralise the charge for its consumers, Jio also announced additional data benefits.
This is how the scheme would work. If a Jio consumer makes calls to a Bharti Airtel or Vodafone Idea network, the 6-paise-per-minute termination charge, which the originating network has to pay to the terminating network, would have to be borne by the Jio consumer.
So, a three-minute call from a Jio phone to a Bharti network would see the subscriber of the former shelling out 18 paise.
Jio has come out with IUC top-up vouchers in four denominations - Rs 10, Rs 20, Rs 50 and Rs 100 - which would entitle users with free data of 1, 2, 5 and 10 GB, respectively. For postpaid users, the charge for such calls would be adjusted in the monthly bills.
The idea behind the move is to ensure that Jio does not have to pay termination charge from its pocket. If consumers give missed calls on rival networks and get a callback, they save such a charge, or alternatively, if they make WhatsApp calls they don’t have to pay it either.
Jio said since its launch in September 2016 it had to bear Rs 13,500-crore payment to Bharti Airtel and Vodafone Idea as termination charge.
Trai had last reduced termination rate in September 2017 by a massive 57% to 6 paise per minute. Prior to it the rate was 14 paise per minute. At that time, Trai had said it proposes that from January 2020 operators move to a regime of zero rate.
In its consultation paper issued on September 18 this year, however, the regulator said, "While revisiting the issue, based on the actual developments during the last two years, it needs to be decided as to whether the date 1.1.2020, earlier fixed for implementing BAK regime (zero termination charge), through IUC Regulations 2017, still holds or it requires reconsideration."
The reason behind Trai’s rethink on moving to a zero-rate regime is that traffic imbalance, though reduced from pre-September 2017 days, still exists. According to figures shared by Trai, Bharti’s incoming calls (from other networks) stands at 54.70% compared with 45.30% of outgoing calls. Jio’s incoming calls stand at 35.75% and outgoing at 64.25%, while for Vodafone Idea incoming calls are 59.30% and outgoing at 40.70%. Since termination charges are paid on the basis of outgoing calls, it can be seen that Jio has the lowest percentage of such calls, so its outgo on termination is the highest. It is because of this imbalance that the incumbents are opposed to any move by Trai to reduce the termination charges to zero from January.
According to Jio, post-September 2017, while the incumbents reduced voice tariffs for their 4G customers, they continued to charge exorbitant tariffs to their 350-400 million 2G customers, and in fact, increased the tariffs for voice calls to around Rs 1.50 per minute.
They also charge a minimum of Rs 500 per 1 GB for data from their 2G customers.
"The price differential of free voice on Jio network and exorbitantly high tariffs on 2G networks causes the 350-400 million customers of Airtel and Vodafone Idea to give missed calls to the Jio customers. Jio network receives 250-300 million missed calls on daily basis," Jio said.
"This huge missed call phenomenon converts the incoming calls to Jio into outgoing calls to other operators. The 250-300 million missed calls per day should have resulted in 650-750 million minutes of incoming traffic to Jio. Instead, the call back made by the Jio customers results in 650-750 million minutes of outgoing traffic," Jio added.
Refuting Jio’s interpretation of the Trai’s roadmap on IUC and the former’s charge on missed calls, Bharti Airtel said in a statement: "Assumptions made by Trai were to evaluate two factors: One was the adoption of VoLTE (4G), which Trai assumed will bring the cost down. Second, with the growth of smaller sized operators, symmetry of traffic would ensue. 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. In line with Trai’s stated position, therefore, they have issued a consultation paper in September 2019 to reassess the time lines of the shift from 6 paise to a zero charge. Clearly, this offnet charge being levied, therefore, is to force IUC to be brought down despite the heavy burden it puts in the receiving network. We are grateful this very timely consultation paper reassessing IUC has been issued by Trai."
Meanwhile, Vodafone Idea said in a statement: "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."