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Telcos' clash: Erase call termination fee, says Jio; others want it doubled

There is little new in the demands telecom companies made at their meeting with the sector regulator on Tuesday to decide on what is<br>known as inter-connect charges (IUC).

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Telcos' clash: Erase call termination fee, says Jio; others want it doubled

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  1. Telcos'clash:Erasecallterminationfee,saysJio;otherswantitdoubledTelcos'clash:Erasecallterminationfee,saysJio;otherswantitdoubled ThereislittlenewinthedemandstelecomcompaniesmadeattheirmeetingwiththesectorregulatoronTuesdaytodecideonwhatisknownasinter-connectcharges(IUC). WhileAirtel,VodafoneandIdeaaskedfordoublingoftherate,ormore,RelianceJioaskedforitscompleteremoval.Theirhardenedpositions,however,makesitcleartoTelecomRegulatoryAuthorityofIndia(Trai)ChairmanRSSharmathattherewillbenocompromiseamongthem,withoutsortingoftheirothercontradictorypainpoints. Thenewelementintheoncehugelysuccessfulbusinesssectoristhere-emergenceoffrictionathistoricallevels.Whenithadhappenedin1999,thethengovernmenthadframedthenewtelecompolicy.Whenitagainhappenednineyearslaterin2008,itledtotheso-called2Gscam.Andnow,nineyearslater,thefrictionhasagainsurfaced. Whilethenumberofyearsisacoincidence,thepotentialtocreatedisturbancesinthepolicyisnot.Thelossesformostofthesecompaniesareunexceptionallyhigh.Atthesametime,thefinancialstakeforthegovernmentfromthemisalsohigh. Fromthesuccessiveroundsofauctions,thegovernmenthassofarcollectedoverRs3.6lakhcrore,whichiscloseto25percentofitstotalnon-taxrevenueinthepastsevenyears,areportbyratingagencyIcranotes. Whatisinterconnectcharges?

  2. Telcos'clash:Erasecallterminationfee,saysJio;otherswantitdoubledTelcos'clash:Erasecallterminationfee,saysJio;otherswantitdoubled Wheneveramobilevoicecallfromonenetworktoanothernetworkismade,thecompanywherethecalloriginatedpaysthischargetotherecipientCompanies News in India.ThisisknownastheIUC,andithasbeeninexistenceundersection11oftheTraiActsince2003.Thatwastheyeartheregulatorscrappedthesystemofmakingtherecipientofamobilephonecallpayforthecost. Telecomcompaniesinsteadmovedtochargeoneanotherandbuildthecostintotheirtariffplans.Underthissystem,thosewhogetmorecallsbenefitattheexpenseofthosewhoreceiveit,sooldernetworkslikeAirtelandothersearnmore.RelianceJioseesitasarevenuedampener. Aboutayearago,Traimovedaconsultationpaperaskingforthechargestobeclipped,andthatcreatedafurore.Goingbythecompetitiontheory,thereisareasontoclipit,sinceitencouragescompaniestomilkontheirpastinvestmentswithoutanyincentivetocutcosts.

  3. Telcos'clash:Erasecallterminationfee,saysJio;otherswantitdoubledTelcos'clash:Erasecallterminationfee,saysJio;otherswantitdoubled Itislikethehigherrevenuethegovernmentusedtopaytoolderfertilisercompanies,knownasgoldplating.Thehigherthecosts,thegreaterthedemandforhigherIUC. Atthesametime,Sharmahasnotbeenabletocutothercostsforoldercompanies— licensedtelecomcompaniesneedtopaytothegovernmentabout8percentoftheirtotalrevenuefromallthelinesofbusinesstheymightbeinvolvedin. Itisinadditiontothepricetheypaytobuyspectrum,itsusageandotherthings,buttheyhavenoabilitytopartnerwithanycontentplayertoearnadditionalrevenue.Couldthegovernmentatthisstageofferagrandbargainforthecompanies?Thisremainstobeseen. Thankyou

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