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“How can interconnection charges be determined for VoIP, VoLTE calls?” asks TRAI


The TRAI is asking if we need to change the current approach, where users aren’t charged for incoming calls, and only the “calling party pays”. It asks this in the context of Whatsapp and Skype calls, where both the users receiving and making the call pay for data usage. So the TRAI is asking in a consultation (pdf) whether the Calling-Party-Pays (CPP), applicable to telecom, should continue.

When a subscriber dials a voice call, his/her telco pays Interconnect Usage Charges (IUC) in form of termination charges to another telco, whose network the call terminates on. Subsequently this is billed to users under the current calling-party-pays (CPP) method: a subscriber making a call pays for it to his telco (minutes or seconds billing), and the telco in turn pays termination charges to the other telco, where the call terminates on.

TRAI currently charges IUC on the basis of the type of network; note that there is no termination charges for calls originating on wire-line networks:


Why TRAI is consulting on setting new IUC charges: When BSNL submitted a proposal to launch fixed mobile telephony (FMT) wherein calls are hosted via the Internet (3G, 4G, WiFi), few telcos raised concerns against it, stating that it allowed BSNL to bypass international termination charges. While those telcos added that setting no termination charges for wireline networks would lead to “huge losses to not only the access providers but also to the exchequer”. Subsequently, BSNL’s plans were put on hold.

But this has raised TRAI’s concerns and it looks to suggest how termination charges can be set for VoIP and IP-based calls. Note that TRAI has already issued a consultation paper on June asking the same questions, while the current consultation looks to review the whole aspect  of termination charges.

“However, the matter (BSNL’s plans on VoIP) requires a close look to redress the concern as to how voice calls travelling on public internet should be treated from the perspective of termination charges,” TRAI mentioned in the paper.

Interconnection charges for VoIP, VoLTE calls

The regulator points out several telcos have already built networks using 4G LTE standards, while “few of the telcos” are looking to host voice calls entirely on VoLTE technology sooner. It added that “many telecom networks are migrating towards IP-based networks…regulators, around the world, are working towards facilitating migration towards Next Generation Networks (NGN)” which are IP-based networks that provides better quality of service to end consumer.

However, TRAI point out that on IP–based networks, “there has been no custom (globally) of levying termination charges for the traffic arriving in a particular network” and that users simply pay for data. This can be related to the existing Bill-and-Keep (BAK) method wherein a telco does not pay any termination charge to its interconnecting telco. Each telco instead bills its own subscribers for outgoing calls that it sends to other telcos and keeps all the revenue received from its subscribers. “BAK is the natural regime in the public Internet,” added TRAI.

Interconnection charges for VoIP is a hindrance: It added that setting additional interconnection charges (on basis of costs incurred) only works as a “disincentive” or a hindrance to the deployment of IP-based and VoIP based telecom networks. However, TRAI says the BAK rule for interconnection might work for further increasing penetration of IP-bases networks:

“Since IP based networks are poised to be the networks of the future for providing telecom services, a BAK regime (for interconnection) may be seen as a natural progression in line with the development of technology.”

And if the BAK method comes into existence for facilitating VoIP, VoLTE, customers will pay indirectly for interconnection charges, and new telcos will be able enter the market providing cheaper calling rates, which worries existing operators. Note that TRAI currently uses BAK method to determine domestic interconnection charges for all calls originating on wireline (landline) networks, and for calls originating from wireless (mobile) networks but terminating on wireline (landline) networks. Domestic calls originating and terminating on wireless networks are charged on basis of call-cost basis.

The regulator has also categorized IP-based calls in two types to understand how Interconnection charges can be applied:

  1. Packed switched calls: These calls originate or terminate on a telco’s network hosted via packet-switched networks rather than the traditional circuit-switched networks. TRAI refers to calls hosted via packet-switched networks as VoIP calls since they carried over Internet Protocol (IP). Current regulations require telcos and other service providers on 4G networks to re-direct calls via 2G or 3G networks, and not on 4G, since it runs on VoLTE i.e voice handled via an IP-based network.
  2. Internet Telephony: When voice calls are simply transmitted over the public Internet, they are denoted as ‘Internet Telephony’ calls. In case an access provider hosts call via Internet telephony, the user pays for the data he/she consumes.

TRAI further pointed out that any attempt to set a uniform termination charge on basis of cost per VoIP, VoLTE, IP-calls would be a challenging task, while suggesting that BAK method could be the most appropriate. It has also asked the stakeholders and the general public its views regarding setting Interconnection costs either through BAK method or cost-basis, and finally make VoIP calls legal in India.

TRAI has issued 10 questions in this consultation (pdf) for stakeholders, consumers, and companies. Comments and responses can be forwarded to interconnection.trai@gmail.com by 5th September 2016, counter-comments can be forwarded by 19th September 2016. More on thais below.

Questions for consultation

Q1: In view of the recent technological developments in the telecommunication services sector, which of the following approaches is appropriate for prescribing domestic termination charge (viz. mobile termination charge and fixed termination charge) for maximization of consumer welfare (i.e. adequate choice, affordable tariff and good quality of service), adoption of more efficient technologies and overall growth of the telecommunication services sector in the country?

(i) Cost oriented or cost based termination charges; or
(ii) Bill and Keep (BAK)? Please provide justification in support of your response.

Q2: In case your response to the Q1 is ‘Cost oriented or cost based termination charges’, which of the following methods is appropriate for estimating mobile termination cost?

(i) LRIC
(ii) LRIC
(iii) Pure LRIC
(iv) Any other method (please specify). Please provide justification in support of your response

Q3: In view of the fact that the estimates of mobile termination cost using LRIC method and LRIC+ method yielded nearly the same results in year 2011 (as filed in the Hon’ble Supreme Court on 29.10.2011) and in year 2015 (as estimated for the Telecommunication Interconnection Usage Charges (Eleventh Amendment) Regulations, 2015 dated 23.02.2016), would it be appropriate to put to use the estimates of mobile termination cost arrived in the exercises of year 2011 and year 2015 in the present exercise?

Q4: If your response to the Q3 is in the negative, whether there is a requirement of running the various LRIC methods afresh using the information on subscriber, usage and network cost for F.Y. 2015-16 for estimation of mobile termination cost?

Q5: In what manner, the prescription of fixed termination charge as well as the mobile termination charge from wire-line networks as ‘zero’ through the Telecommunication Interconnection Usage Charges (Eleventh Amendment) Regulations, 2015 is likely to impact the growth of the Indian telecommunication services sector as a whole?

Please support your viewpoint with justifications.

Q6: Whether termination charges between different networks (e.g. fixed-line network and wireless network) should be symmetric?

Q7: Which approach should be used for prescribing International Termination Charge in the country? Should it be kept uniform for all terminating networks?

Q8: Whether, in your opinion, in the present regulatory regime in the country, the stand-alone ILDOs are not able to provide effective competition owing to the presence of integrated service providers (having both ILDO and access service licenses) and, therefore, there are apprehensions regarding sustainability of the stand-alone ILDOs in the long-run?

Q9: If your response to the Q8 is in the affirmative, which of the following approach should be used as a counter-measure?
(i)Prescription of revenue share between Indian ILDO and access provider in the International Termination Charge; or
(ii)Prescription of a floor for international settlement rate (levied by ILDO uponthe foreign carrier) for international incoming calls; or
(iii)Any other approach (please specify). Please provide justification in support of your response.

Q10: Is there any other relevant issue which should be considered in the present consultation on the review of Interconnection Usage Charges?

Image Credit: King Huang under CC BY 2.0

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