Cut in IUC will jeopardize both rural coverage and connectivity: Idea Cellular

India's third largest telecom operator Idea Cellular said that the proposed reduction by the TRAI in the mobile termination charge (MTC) is a body blow to all operators who depend upon fair, equitable, and transparent regulation to encourage and sustain reinvestment in the sector.

The company has said that the decision is riddled with egregious infirmities.

Further, Idea also claimed that the authority's verdict to cut IUC to a paltry 6 paisa per minute, determined on the basis of a new cost methodology (Pure LRIC model) which brazenly ignores the stupendously high prices paid for the spectrum, - a key raw material without which mobile telephony services cannot be delivered - compromises this principle, and will negatively impact the already stressed financial health of the sector.

The decision to cut in mobile call connection charges or interconnection usage charges (IUC) will jeopardize both rural coverage and connectivity, Idea further said.

Idea Cellular has also stated that there are more than 900 million consumers in India relying on established 2G / 3G / 4G (non-VoLTE) networks for accessing voice services. A majority of these users are located in the rural heartland and are dependent on the enormous mobile telecom infrastructure investments, to stay connected.

A large swathe of these rural sites are predominantly utilized for receiving incoming calls, and even in the erstwhile IUC regime were being subsidized by existing operators. "The revised IUC rate further jeopardizes both rural coverage and connectivity," said the operator.

Further, in an environment of tenfold induced traffic asymmetry, this is a regulation-driven cross-subsidy among competing operators whereby one operator is passing the burden of terminating its voice traffic on to other operators.

Since 2003, the Trai has envisaged IUC to implicitly function as floor to the retail tariffs which would limit the scope for predatory pricing by any operator. With the drastic reduction in the prevailing IUC and the proposed migration to a BAK (Bill And Keep) regime from 2020, the mobile telecom sector may very well be further exposed to the claws of predatory and anti-competitive pricing tactics, disturbing the long-term competition structure of the industry to a near monopoly.