Cutting IUC a poor decision, it's given Jio an unfair edge, says former Trai boss Rahul Khullar
, ET Bureau|
Sep 23, 2017, 04.59 PM IST
Former Trai chairman Rahul Khullar has decried the sector regulator's move to slash the interconnect usage charges (IUC) charge, which, if implemented, could sound the death knell for the telecom industry. In an exclusive interview to Kalyan Parbat, he said the regulator’s move is without economic justification.
Edited Excerpts:
What are your views on the Trai’s new IUC regulation?
Trai’s entire IUC regulation is quite simply, appalling. It is a very poor decision without any economic justification. It appears to be based on a pipedream that some people are trying to sell that data will drive bulk of telco revenues in India in all of two years. Have you seen the state of our telecom infrastructure, private and public? Do you seriously believe Next Generation Networks are around the corner? Truth is, that voice still accounts for nearly 80% of telco revenues and I don’t see the share of data revenues even exceeding 35% of total telco revenues in the next two years.
This is essentially Trai’s way of forcing India’s biggest telcos to immediately switch over to a high-end technology like VoLTE that requires fully dedicated IPnetworks. Given that telecom networks in India are far from being fully IP-based, who is Trai to decide what should be the mobile broadband technology of choice?
What in your view will be the effect of Trai’s decisions to cut IUC from October 1and scrap it from 2020 when it moves to the ‘bill and keep’ (BAK) regime?
If implemented, these decisions will severely hurt incumbent carriers. The telecom industry is already battling acute financial stress, and Trai’s regulation under these circumstances, is akin to giving a huge wallop to a dying patient.
Remember, Trai has been tasked with two key responsibilities – looking at consumer interest and also ensuring the orderly development of the telecom industry. It needs to strike a balance. Where is that? Under the circumstances, I also see no logic in the telecom regulator’s unseemly hurry to bring in a regulation, mandating BAK from a defined future date. This appears clearly aimed at helping Jio, which has backed the zero mobile termination charges model. In fact, there is not a single country in the world where a telecom regulator has issued an order, mandating BAK. For the record, BAK was introduced in the US after two major operators with balanced traffic flows mutually agreed to do so to avoid billing complications.
Telcos are upset with Trai for not sharing its IUC cost model. Your thoughts on Trai’s cost model ?
Trai has clearly relied on a least-cost model that excludes spectrum costs and common costs, as in wholesale market costs, to compute IUC. Such a cost model is not being used in any developing country. Trai has imported a cost model that has been adopted by mature and advanced telecom markets across Europe. It is certainly not suited to India.
Edited Excerpts:
What are your views on the Trai’s new IUC regulation?
Trai’s entire IUC regulation is quite simply, appalling. It is a very poor decision without any economic justification. It appears to be based on a pipedream that some people are trying to sell that data will drive bulk of telco revenues in India in all of two years. Have you seen the state of our telecom infrastructure, private and public? Do you seriously believe Next Generation Networks are around the corner? Truth is, that voice still accounts for nearly 80% of telco revenues and I don’t see the share of data revenues even exceeding 35% of total telco revenues in the next two years.
This is essentially Trai’s way of forcing India’s biggest telcos to immediately switch over to a high-end technology like VoLTE that requires fully dedicated IPnetworks. Given that telecom networks in India are far from being fully IP-based, who is Trai to decide what should be the mobile broadband technology of choice?
What in your view will be the effect of Trai’s decisions to cut IUC from October 1and scrap it from 2020 when it moves to the ‘bill and keep’ (BAK) regime?
If implemented, these decisions will severely hurt incumbent carriers. The telecom industry is already battling acute financial stress, and Trai’s regulation under these circumstances, is akin to giving a huge wallop to a dying patient.
Remember, Trai has been tasked with two key responsibilities – looking at consumer interest and also ensuring the orderly development of the telecom industry. It needs to strike a balance. Where is that? Under the circumstances, I also see no logic in the telecom regulator’s unseemly hurry to bring in a regulation, mandating BAK from a defined future date. This appears clearly aimed at helping Jio, which has backed the zero mobile termination charges model. In fact, there is not a single country in the world where a telecom regulator has issued an order, mandating BAK. For the record, BAK was introduced in the US after two major operators with balanced traffic flows mutually agreed to do so to avoid billing complications.
Telcos are upset with Trai for not sharing its IUC cost model. Your thoughts on Trai’s cost model ?
Trai has clearly relied on a least-cost model that excludes spectrum costs and common costs, as in wholesale market costs, to compute IUC. Such a cost model is not being used in any developing country. Trai has imported a cost model that has been adopted by mature and advanced telecom markets across Europe. It is certainly not suited to India.
