Telcos lash out at Trai on rate cut: COAI says old players would take a hit of Rs 5,000 crore, Reliance Jio is only gainer

Criticising the Telecom Regulatory Authority of India's (Trai) decision to slash call connect charges, the cellular operators association of India (COAI) on Wednesday said the established telecom players would take a hit of Rs 5,000 crore during the current fiscal year due to the decision.

COAI, which represents leading telcos Airtel, Vodafone and Idea, said that the Trai decision had come at a time when the debt-ridden industry was under financial stress because of the high cost of spectrum. COAI director general Rajan Mathews said Trai should explain the calculation model it had used to reduce the interconnection usage charge from 14 paise to 6 paise per minute.

However, Trai chairman R S Sharma said the detailed methodology on which Trai's calculations are based is part of the explanatory memorandum to the regulations all of which have been placed in public domain now.

Mathews contended that Trai's assumption that all operators should move towards the latest VoLTE technology is not practical as it will hit services for 2G users who account for 70 per cent of the total subscriber base in the country.

In the last financial year, industry revenue from at 14 paise was around Rs 10,000 crore. At 6 paise, we expect it to decline to Rs 5,000 crore, Mathews explained. VoLTE (Voice over Long-Term Evolution) is the latest version of calls that are made on Internet-based networks.

Established telecom operators have argued that every call on the network has a cost, and expenses of an incoming call on their network should be borne by the operator from whose network, the call has originated. Trai has questioned as to why telecom operators are not migrating to newer technologies such as VoLTE when clear demonstrable large differences exist in the cost of providing the same services.

"Technology migration sounds good, but we have to look at practical dimensions of what happens in terms of incumbents. They don't have the same profile as Jio does. Jio can start with all 4G calls, but incumbents are forced to bear the cost of carrying their legacy," Mathews stated.

He said that in 2010 when spectrum was auctioned, the government had defined the service for which it has to be used and based on those requirements, Jio was bound to build a data network. But operators who purchased 3G at a high price had to use other technologies. At present, Reliance Jio offers entire phone call service using the VoLTE technology.

Airtel has just started VoLTEbased calls and plans to expand it across India by the end of the current fiscal. All operators, Mathews said, want to move to 4G network, but they cannot force customers using 2G services to move to 4G as most of them cannot afford 4G handsets.

Leading telcos Bharti Airtel and Vodafone also issued separate statements saying the Trai move would benefit only new entrant Reliance Jio and end up worsening the financial health of the already stressed 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. This was a reference to Reliance Jio.

However, the Trai chairman dismissed charges of nontransparency in its decision to cut call connect rate, saying the cost calculation is objective and scientific and there is no question of helping or harming any operator.