Alleging that Reliance Jio aims to build its business by “getting a free ride on the highways” build by other operators, Bharti Airtel on Thursday said low interconnection usage charges (IUC) has led to a loss of Rs 550 crore per quarter for the country’s largest operator.
“Their proposal to move to Bill and Keep will further burden other operators and make them weak. If the demand of Reliance Jio is met, it will continue with its strategy of predatory pricing and ultimately throttle all competition,” said Ravi Gandhi, Chief Regulatory Officer, Bharti Airtel, adding that this is the “sinister design of Jio”.
In Bill and Keep method, operators bill their own subscribers for outgoing calls and keep the revenue received. The older operators and Reliance Jio have been at loggerheads over the issue for nearly a year now. The top three operators – Bharti Airtel, Vodafone and Idea Cellular, have been pitching for doubling the IUC to 30-35 paise from 14 paise currently.
Mobile operators seek doubling of IUC
In a presentation to regulator TRAI earlier this week, Reliance Jio had said IUC rates have risen from 10 per cent of voice call charges in 2003 to 45 per cent of call charges in 2017, and “the number one operator has made excess recovery of Rs 73,385 crore”.
“By proposing a transition to the ‘Bill and Keep’ regime with zero mobile termination charge (MTC), Reliance Jio wants to simply transfer its cost to Airtel and other operators. As per current estimates, this cost would be to the tune of Rs 15,000 – 20,000 crore per year for the industry and will only increase going forward,” Bharti Airtel said in a statement.
“Such cost transfer will allow Reliance Jio to use its muscle power and price its services in a predatory manner to kill the rest of the industry and create a monopoly,” it added.
It further added that the current MTC of 14 paisa is well below the cost of producing a minute, which is currently at 35 paisa. “In fact, with the tsunami of calls originating from Reliance Jio’s network, Airtel loses 21 paisa for every minute that is carried on its network. This has resulted in a loss of Rs 550 crore per quarter for Airtel alone,” the operator explained.