Reducing Interconnect Usage Charges (IUC) will destabilize the telecom sector, defeat government rural coverage objectives and cause inconvenience to users, Vittorio Colao, Vodafone Group CEO said in a letter to the DoT and Ministry of State for Communication. Colao sought “urgent intervention” from central authorities asking for a reduction in spectrum payments while opposing the reduction of termination charges. Telecom companies and the regulator TRAI have been discussing the issue of IUC charges at a time when voice calls are being handed out in bulk for free. When a subscriber initiates a voice call, his/her telco pays IUC charges in form of ‘termination charges’ to the other telco on whose network the call is received. TRAI currently charges IUC on the basis of the type of network the call originates or terminates on: Airtel, Idea and Vodafone (existing telcos), earlier demanded that the IUC charges be increased to 30-40 paise per minute while Reliance Jio wants it fully scrapped. Colao in his letter to the ministry mentioned that Vodafone is “seriously alarmed to see reports that the regulator is considering a reduction in MTC”. He said that “few operators” like itself have invested heavily into connecting both rural and urban areas and that any drop in termination charges will “destroy” investments made by telecom companies. “Around 15-20% of Vodafone’s cellular sites run at a loss”: Vodafone CEO Vodafone receives 14 paise per minute for every call terminating onto its network. However, Colao said that this is below the cost of the…
