TRAI revises IUC (Interconnect charges) to 6 paise/minute, effective Oct 1

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The termination charges will be completely scrapped from January 1, 2020. The changes in domestic termination charges will be put into effect from October 1, 2017, as stated by a press statement by the TRAI.

Domestic Termination charges are the charges payable by a Telecom Service Provider (TSP) whose subscriber originates the call, to the TSP in whose network the call terminates.

"We do not believe that the introduction of a BAK regime or a reduction in IUC is in the long-term interests of India's telecom sector", Chua Sock Koong, Group Chief Executive Officer, Singtel, said in the letter.

Effective October 1st, TRAI has reduced IUC charges to 6 paise/minute from the existing 14 paise/minute.

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In a presentation before Trai, Reliance Jio had earlier said that telecom operators gained to the tune of Rs 1 lakh crore from the IUC. It is paid to the telecom operator who receives the call. One of the arguments given by TRAI on this included that the authority wanted to provide better and cheaper options to the customers to make phone calls and to remain connected. They wanted the termination rate to be raised and benchmarked against the actual cost. However, TRAI has been in support for reducing IUC charges off late.

Interconnect charges have become a big bone of contention between Reliance Jio and Aircel, on the one hand, and the other telecom players, including Tata Teleservices, Idea, Airtel and Vodafone, on the other. "Operators would be able to offer consumers a wider variety of retail packages and tariff structures", Trai said in its explanatory memorandum, issued today as part of the regulation. While the top operators had pitched for doubling the MTC "to recover their cost", the newer rival had suggested zero charges and shifting to the bill-and-keep regime, under which operators bill their own subscribers for outgoing calls and retain revenue received.

The Trai's decision came via a gazette notification issued more than a year after it started the consultation process on the contentious issue, which saw a war of words between telecom companies.

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