Idea Cellular moved to HC against TRAI's new IUC

Charges reduced by 57% to 6 paise per minute

Aditya Birla Group’s Idea Cellular moved the Bombay High Court on Thursday against the Telecom Regulatory Authority of India’s (Trai’s) move to reduce the inter-connect usage charge from 14 paise a minute to 6 paise a minute.

According to Idea, the Trai move would help only one operator (Reliance Jio) while hurting the financials of all the incumbent companies. A similar move by Bharti Airtel is also expected. 

Just before the Trai's move, Kumar Mangalam Birla, chairman of the Aditya Birla group, had written two letters to the Trai providing details on how reducing the IUC will not reduce tariff and, on the contrary, put the entire financials of the telecom industry at risk. These letters were ignored by the regulator. Last week it went ahead with reducing the rate from 14 paise a unit to just 6 paise as against a cost of 35 paise a unit.  

What is 'Termination Charge" ?

Termination Charge is paid to the operator on whose network call is terminated and it is paid by the operator by whose network call is originated.

About 92% of the calls are now originated from Jio and terminates on other networks.

Consequently, lowering termination charge will benefit Jio the most.

Idea's argument

Idea said the move brazenly ignored the high prices paid for spectrum, a key raw material without which mobile telephony services cannot be delivered, and will negatively impact the already stressed financial health of the sector.

Idea had earlier said as of now more than 900 million consumers in India rely on established 2G/3G/4G (non-VoLTE) networks for accessing voice services. A majority of these users are located in the rural heartland and are dependent on enormous mobile telecom infrastructure investments to stay connected.  

International Rates regarding 'Termination Charge'

European average settlement rate of 1.27 euro cents per minute (approximately 98 paise per minute), more than 16 times higher than the prescribed IUC rate of 6 paise per minute in India,” said the statement.