The Beginning and the End!!

Are the right steps being taken to advance the telecom ecosystem or would it be a repeat of history where the telecom sector and the consumer as a large suffer. Read on to find out.

BY RATTANDEEP SINGH | 5 Mins Read

The telecom sector has been completely transformed in the recent past. Having witnessed a huge growth in terms of data consumption and voice calls and along with it having the world’s most affordable data tariffs, the sector has transformed in the last three years with the number of operators being reduced from 9 to just 3 and all this can be owed to the rise of Reliance Jio.

Since its entry into the market from mid 2016, Jio has fundamentally altered the rules of the game leading to a huge pressure on the incumbent operators who have been feeling the heat with many of them shutting down and two of the largest merging in order to survive in the face of huge disruptions brought in by Jio.

One of the indicators of this disruption is the hotly contested issue of Interconnect Usage Charge (IUC). IUC is a sort of clearing fees that telecom operators pay when the customer dials onto the network of some other operator. IUC's have been never been talked about with such intensity before in the telecom circles but Jio's recent move of recovering the IUC from the customers and charging them the IUC is just the thing that has drawn a very wide attention on the IUC issue.

So there are two sides to this argument, the incumbents being the net receiver of IUC money are happy to keep IUC as such and because of the lack of technological advances from their side it suits their model to have IUC up and running. The incumbents say that IUC helps them to maintain the clearing infrastructure so that they can improve the consumer experience.

The argument from Jio's side is that IUC’S are no longer needed as today most people have access to VoLTE (voice over LTE) technology and thus calls need not be made through the traditional interconnect system, instead we should use a much cheaper and more efficient system of using internet for calls precisely what VoLTE does. Jio says that scrapping IUC acts as an incentive for the telecom operators to invest into newer technologies and to facilitate better consumer experience.

Even though the charge of IUC was reduced from 14 paisa a minute to 6 paisa a minute in June and is scheduled to be absolutely 0 from March 2020, Jio’s move to recover IUC from users goes a long way to highlight the financial woes that the telecom sector has been going through and the crippling debt that it has undertaken over the years.

Even though Jio in the past has called for early auction 5G airwaves brushing aside claims of poor health of telcos, its recent move is quite contradictory to its previous stance.

But Jio's argument can be bought on the fact that VoLTE is the norm of telecommunications services all over the world and many countries are even planning to go ahead with 5G by mid 2020. If the TRAI (Telecom Regulatory Authority of India) goes ahead with its move to re-examine its decision to eliminate all IUC charges in the future innovation may take a back seat and in Jio’s words “will be a regressive move and will do nothing to benefit the consumers as it will provide little incentive to telcos to go for adoption of newer technologies.”

This move by TRAI may have been taken after reports of the PMO having undertaken several meetings with telecom operators over the past few weeks to understand their precarious situation and do what may help them to grow stronger come out of crippling debt and prevent the collapse of another Telco which will lead to a lot of job losses and will even have more negatives than any few positives it might offer, that too only to other telcos in terms of increased subscriber bases.

This move on part of TRAI has been quite regressive if seen from the consumer’s point of view and makes little sense at a time when the government is gearing up for the auction of 5G airwaves in last quarter this year.

All this is now leading to a sort of a mystery in itself as to what the next step of the government will be and how things may pan out in the telecom sector.

The question that need to be seen is that whether this move by Jio would be new beginning after 3 years of consistently low tariffs or whether it would be an end to the right steps being taken to advance the telecom ecosystem or would it be a repeat of history where the telecom sector and the consumer as a large suffer due to this meagre IUC issue and the resultant mess that has been created in the past week.