In a move that has stunned the telecom space in India, Reliance Jio has announced that calls made by its subscribers to mobile numbers on other networks will no longer be free. Instead, subscribers will have to pay Rs 0.06 per minute for calls made to mobile numbers that are owned by mobile networks including Airtel, Vodafone-Idea, BSNL and others. At the very center of this discussion sits the IUC, also known as Interconnect Usage Charge. The Rs 0.06 charge that Reliance Jio is levying on calls made outside the Jio mobile network are the IUC charges, as mandated by the Telecom Regulatory Authority of India (TRAI), for terminating a call from their network on another mobile network. But what does this mean?
What does this mean for Jio customers, and indeed customers of other mobile networks? First up, we could be seeing the first signs that the unlimited calls tariffs that we have enjoyed all this while, are coming to an end. At least till TRAI steps in to deal with the IUC tariffs or when the proposed abolishment of IUC kicks in in January 2020. In a way, the mobile tariffs, for prepaid and postpaid users, has been kept in check by the very affordable tariffs for voice calls that Jio offered—forcing rival operators to offer something close to those tariffs, if not lower. Now, the likes of Airtel and Vodafone-Idea will also see charging for calls made to other networks as an option. If that is to happen, then the cost of using a mobile connection will surely go up.
Before we try to decipher the meaning of this move, we first need to understand why this happened.
The Interconnect Usage Charge or IUC is a tariff paid by one mobile telecom operator to another, when the customers of one mobile network make outgoing mobile calls to another operator’s mobile network, that is to their friends and family using the other mobile network. For example, if person A is to make a call from a Reliance Jio connection to Person B using an Airtel mobile connection, Reliance Jio will have to pay Rs 0.60 per minute to Airtel for the call—because the call landed on the Airtel network. These calls between two different networks are known as mobile off-net calls, as defined by the TRAI. The IUC charges are fixed by the TRAI at Rs 0.60 per minute.
Till now, Reliance Jio had been paying the IUC charge to other operators even though they were offering unlimited voice calls to users, irrespective of the network they were calling to, for local calls and STD calls. Reliance Jio says that this new tariff will stay in place till the IUC tariffs are abolished in January 2020. “So far, in the last three years Jio has paid nearly Rs.13,500 crore as NET IUC charges to the other operators,” says Jio in an official statement.
Over the last three years Jio says they have paid nearly Rs. 13,500 crore as NET IUC charges to the other operators. One of the reasons for that higher tariffs on rival 2G networks caused users to terminate missed calls to their friends and family using the Jio network. Reliance Jio says that while this should have resulted in incoming call traffic on the Jio network, instead, the call back made by the Jio customers results in 65 to 75 crore minutes of outgoing traffic. And Jio had to pay IUC charges on all those calls, to the tune of Rs 0.06 per minute.
It is expected that the IUC charges will be removed for all operators come January 2020, which could see this tariff change being reversed.
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