IUC debate – A Lovers’ tiff or is it ?

IUC debate - A Lover's tiff or is it ?

Reliance Jio has set the proverbial cat amongst the pigeons by announcing that they will be passing on the IUC charges to their customer. At 6p per minute this is not insignificant given the fact the customers have gotten used to phrases like Free and Unlimited

For a company that largely owes its explosive growth to a series of regulatory interventions – divine fortuitousness/providence or blatant favoritism (depending on who you ask) crying foul at first hint of unsuitable regulation doesn’t exactly evoke compassion.

When Jio launched in 2016, the incumbent operators were required to provide interconnects to face a tsunami of calls from Jio– then a newcomer and had announced everything free. Even though they would be paid the termination charges, the incumbents resisted but eventually relented when the authorities bared the stick.  In Sept 2017, the 13^th amendment was enforced which took us on a roadmap of zero IUC (bill n keep), and that’s when the incumbents protested heavily again. They opposed the Telecom IUC proposal of Sept 2017 (13^th amendment) and the matter is languishing. The terminating charge was at 20p until Feb 2015, 14p until Oct 2017 and post which it moved to 6p which is prevailing currently. This is proposed to be zero from Jan 1, 2020.) This IUC regime was a dream (almost tailormade) since Jio started as a newcomer who benefited from lowering IUC (the incumbents lost a lot) and the burden of IUC vanishes when Jio itself becomes big – a fairytale indeed.

However, that wasn’t meant to be. The TRAI issued a consultation paper mid-September seeking consultation about ‘What if the Zero IUC proposal was pushed ahead?’. This doesn’t suit Jio, as with over 300Mn customers now, they have the largest base and would be a net loser on the IUC front.

Hence have now started charging 6paise per minute to customers. This is an ill-advised step:

a.They had a promise to the customers that voice will be free ‘forever’ and mind you – the promise was made when the new IUC rates were still at 14p per minute and the changes to 14 – 6 – 0 was not even in the horizon.

b.Customers today in the Number Portability era can’t distinguish between an on-net and an off-net call and hence won’t even know whether they will be charged or not when the call is made.

c.It’s extremely inconvenient for a customer who hitherto does a single recharge for unlimited voice, data and SMS. Now he would be required to load a Rs 10 IUC recharge which is a ‘currency’ balance and also need to keep track of it. A regressive step indeed.

d.The IUC charge in its very spirit is meant to be a settlement between operators and not meant to be line item for the end customer to worry about. It’s supposed to be included in the tariff a customer is charged. Or so it has been thus far.

The carrot of 1GB data for IUC top-up of Rs 10 doesn’t cut ice since data is mostly unlimited in any case and 1GB wouldn’t offer any great value whatsoever.

Surely Jio has been credited for disrupting the market and bringing about the ‘data revolution’ that the world is talking about. From a data consumption of 600MB per user to over 10GB per user is nothing short of extraordinary – a change which has impelled the wider digital ecosystem in the country.

It needs to be said here that the TRAI has not a taken a decision as yet – it’s still at the consultation stage. The pre-emptive action by Jio obviously looks like a pressure building tactic on the regulator and make themselves look like a victim. Given their proximity to the establishment they have never had to ‘fight’ the regulator who has been overtly and (sometimes) brazenly benevolent to the Jio cause. ‘Lover’s tiff’ I say – how cute nah!

The company executive in the video statement calling this a ‘regulatory issue’ said “ .. for as long as IUC charges continue to exist, Jio is compelled to most reluctantly but unavoidably … to transparently pass on this regulatory charge to customer…” a tonality that smacks a little short of street protests …albeit politically correct. There is also an online petition doing the rounds urging the regulator to implement the zero IUC from 1^st Jan 2020 as planned. Twitter and WhatsApp went ablaze with their share of protests and memes with the #boycottJio – quite unfairly so.

The incumbent operators like Airtel and Vodafone-Idea had a choice to make in this. They could have followed suit and passed on the IUC charge to the customer. This would have come as a welcome relief on their bleeding P&L, but they chose to ride the moral High Horse. They reinforced the trust and transparency of which Jio suffers quite a deficit – further accentuated by this move.

While the regulator is well within its right to review and relook at the IUC regime in a dynamic telecom landscape, release of the consultation paper just months before the proposed date of implementation of zero IUC (bill and keep) also doesn’t augur too well. It just sends a chill down the spines of the telco mandarins. But to be fair, the postponing of bill n keep arrangement is not without merit. When the revised IUC charges came into force in Sept 2017, it was expected that the traffic imbalance (incoming vs outgoing calls) would have got eliminated and a sort of equilibrium would have reached. Also by end 2019 it was expected that most operators would have moved to packet switched technologies (read VOLTE). The cost of terminating the call would be negligible in which case. And while things are moving in the right direction, we are not there yet.

Whether Airtel, Vodafone-Idea & BSNL also start charging and improve their bottom lines or Jio withdraws the additional charge remains to be seen. What is however clear is that a statement has been made and also goes on to prove yet again that there has never been an easy moment in the lives of telecom folks.