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IUC cut to benefit only new entrant, say Airtel, Vodafone

LiveMint logoLiveMint 20-09-2017 PTI

New Delhi: Leading telecom operators Bharti Airtel and Vodafone have slammed the Telecom Regulatory Authority of India’s (Trai) decision to reduce call interconnection usage charges (IUC), saying the move will benefit only one operator and worsen the financial health of stressed industry.

Vodafone, the country’s second largest operators in terms of number of subscribers, has termed the Trai’s decision as “retrograde regulatory measure”. The incumbent operator in a statement alleged that the move will significantly benefit new entrant alone and would adversely affect the rest of the industry.

Airtel said, “The suggested IUC rate, which has been arrived at in a completely non-transparent fashion, benefits only one operator which enjoys a huge traffic asymmetry in its favour.” Expressing disappointment at the new regulations, Airtel said the industry is facing severe financial stress and the cut in the interconnection usage charges (IUC) will “further worsen” the situation.

The comments come in response to the telecom regulator on Tuesday announcing cut in mobile call connection charges to six paise a minute, and a complete phasing out of these rates from 1 January 2020, a move that will benefit newcomer Reliance Jio and deal a blow to established players.

“As part of an industry, which continues to be a critical driving force behind the economic growth in the country, we are genuinely dismayed by this decision,” said Airtel, India’s largest telecom operator. Last night, Vodafone had expressed dismay at Trai’s latest decision and had claimed that the “retrograde” measure, unless mitigated, will have serious consequences for investment in rural coverage and government’s vision of Digital India.

Mobile companies currently charge 14 paise a minute for allowing a domestic call from a rival operator to terminate on their network. This charge, called Interconnection Usage Charges or IUC, will be brought down to six paise per minute from 1 October 2017, Trai has said. Cellular industry association COAI has termed the move “disastrous”, and warned that most of its members will take legal recourse on the issue, to protect their financial interests.

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