Here's why Reliance Jio, Airtel, Vodafone and Idea clashed over interconnect usage charges

Reliance Jio Infocomm and India's other leading telecom operators including Airtel, Vodafone, and Idea had a serious spat over the implementation of interconnect usage charges (IUC) at the recent open house meeting held by the Telecom Regulatory Authority of India (TRAI). TRAI had arranged to discuss the viewpoints and take the consent of the leading telecom operators regarding the implications of IUC in rural areas.

Reliance Jio argued in favour of dropping the IUC which is currently being imposed at 14 paise per minute for all incoming calls in rural areas. The company suggested that it could offer up to 99% mobile network coverage in the country without charging the customers for incoming calls.

On the contrary, rival telecom operators including Airtel, Vodafone India and Idea Cellular supported an increase in IUC to 30-35 paise a minute, according to Economic Times.

Jio's views were supported by several members of Parliament, a consumer watchdog and Reliance Communications. However, Airtel argued the telecom infrastructure maintenance costs in rural areas required regular income from incoming calls and removal or lowering of IUC would disrupt services.

Also Read: How different is Jio Phone from other feature phones and smartphones?

Airtel has accused Jio's free call service was disrupting the flow of traffic to other networks and the existing IUC rates were insufficient to cater to the rising influx of calls from Jio to Airtel and other networks. Airtel also complained that scrapping IUC would encourage Jio's monopoly in the telecom industry with its unrealistic offers and dirt-cheap pricing tactics aimed at throttling competition.

Jio countered Airtel's argument saying its rival operators were not interested in offering low-cost services in rural India while relatively new carriers are ready to offer a voice call at half a paise per minute, as their network infrastructure allowed pricing concessions.

Vodafone and Airtel justified their argument suggesting that subsidy cannot be offered on IUC as it was meant to recover expenses incurred in maintenance of rural networks at peak traffic loads and network congestion.

Idea Cellular chief financial officer Akshay Moondra also shared a similar viewpoint as Vodafone and Airtel, suggesting that IUC was a fair settlement between operators and not a cost imposed on consumers.

"Idea spent Rs 30,000 crore in 2G two years ago, so it's not correct to say that we're not investing in rural India," he added.

Airtel alleged that it was incurring a revenue loss of Rs 550 crore every quarter owing to the surplus of calls coming from Jio's free calls network. By scrapping IUC, Jio is accused of transferring maintenance costs amounting to Rs 20,000 crore a year to its rivals.

"In effect, Reliance Jio aims to build its business by getting a free ride on the highways built by Airtel and other operators," asserted Ravi Gandhi, chief regulatory officer at Bharti Airtel.