|Untangling the Jio knot|
|Friday, 09 September 2016 03:52|
Bharti/Vodafone must interconnect, but cost an issue
After seeming to be winning the perception battle against the telecom regulatory authority of India’s (TRAI) ill-conceived move to reduce interconnection usage charges (IUC) to zero – a move which seemed to benefit only RJio – incumbent players like Bharti Airtel, Vodafone and Idea appear at the losing end now with RJio complaining they are not allowing its customers to connect to their networks by denying them sufficient points of interconnection (PoI). Apart from the fact that this hurts the common man who is getting a lower-cost voice-data pack from RJio, the IUC law is quite clear that PoIs are a matter of right since denying them is the surest way of killing the competition.
There are, though, some caveats, and there can be no doubt that matters were aggravated by Trai wasting months trying to pass on the buck to the telecom ministry, by RJio demanding way too many PoIs in its ‘test’ phase that involved a whopping 1.5 million subscribers – and while telcos found the 14 paise per minute IUC charge too little, imagine their fear with Trai trying to reduce this to zero on more than one occasion.
Even without IUC being reduced to zero, with the massive number of calls coming into their networks from RJio subscribers – with any newcomer, there are a lot more outgoing calls than incoming ones – this would mean incumbents would get just 14 paise per minute and, to the extent this clogged their networks, they could potentially lose traffic from their own customers. But even if the incoming traffic to an Airtel network is far more than that from it to the RJio one, that’s no justification for not providing PoIs. Where telcos are on a stronger wicket is on the IUC charge itself especially since Trai’s 14 paise order has been challenged in court as being below-cost. When traffic between telcos is roughly similar, this doesn’t matter that much since while the bigger telco – in terms of incoming calls – loses on the below-cost IUC, it more than makes up on the call-origination charges. But when, as is being alleged in the case of RJio, the incumbents are getting 10 times as many calls compared to those going out of their networks, they lose a lot more. Since the IUC, whether the number is correct or below-cost, is based on traffic between telcos being roughly similar, presumably this is why Trai’s Reference Interconnect Offer says “service providers shall not …discriminate between service providers except on the basis of substantial cost-differential… For considering the cost herein the factors like volume of traffic etc., which have direct bearing on the charges of interconnection shall be taken into account”.
Though this matter is undoubtedly headed to court, Trai needed to be pro-active. When RJio did a ‘test’ with 1.5 mn subscribers and the incumbents said they could not provide endless PoIs for a ‘test’, Trai refused to intervene despite being petitioned. When incumbents argued the consequences of a 10:1 call asymmetry, aggravated by a long zero-tariff period, Trai didn’t examine this either, if only to reject it. While Trai will now have to examine the legality of RJio and the incumbents’ positions, it would help if the courts quickly settled the issue of whether a 14 paise IUC is valid and, more important, at what volume of traffic asymmetry can this be altered and, if so, by how much?