Analysis of Telecom Sector: IUC Charges

Analysis of Telecom Sector: IUC Charges

• The end of the Interconnection Usage Charges (IUC) regime on January 1, under which one telecom operator paid a charge to another on whose network a subscriber’s voice call was completed, creates a new era in which these companies can focus on upgrading their networks and service.
• The measure was delayed by a year by regulator TRAI due to concerns that not all operators were ready, and the shift to more efficient 4G networks and compatible subscriber handsets was slower than anticipated.
• Now that the need to monitor call termination data and make IUC payments no longer exists, and a spectrum auction is also scheduled this year, the focus should shift to giving the users a better deal — as reliable call quality and competitive tariffs.
• For the subscriber, other than those who had to pay higher access tariffs on one wireless network due to the IUC system, the latest measure may not carry a significant impact, since providers sold unlimited call packs even earlier.
• One operator, Jio, had a higher proportion of outgoing calls to other wireless operators since its launch a few years ago, thus having to pay significant net interconnection charges, which was six paise per minute since 2017.
• That imbalance has reduced, and TRAI has now introduced an arrangement called bill and keep, which does away with the IUC.
• India’s high density telecom market is poised for further growth as it awaits expansion through 5G and Internet-connected devices.
• Yet, as the Economic Survey of 2019-20 pointed out, intense competition has reduced the number of private players.
• Public sector operators BSNL and MTNL still face a challenge and their future must be clarified early, with efforts to improve their technological capabilities and service levels.
• A parallel trend has been the rise in 4G subscribers from 196.9 million in September 2017 to 517.5 million out of a total wireless subscriber base of 1,165.46 million in June 2019.
• The end of the IUC should spur an expansion of high-capacity networks, going beyond 2G and 3G that some telcos continue to use. The removal of interconnection charges was opposed by them just a year ago.

• For TRAI, which has stressed the importance of consumer welfare through adequate choice, affordable tariff and quality service, it is important to tread cautiously on claims made on behalf of the sector, that higher tariffs alone can ensure the health of telecoms.
• India is a mass market for voice and data services that fuel the digital economy. Badly priced spectrum could lead to auction failures and lack of genuine competition is bound to hamper the growth of the next big wave of telecoms, of which the 5G piece is critical for new services.
• On the consumer side, helping more people migrate to 4G services quickly through affordable handsets will help telcos put their infrastructure to better use.

National Digital Communications Policy, 2018

Objectives:

The overall objectives of the policy, to be achieved by 2022, are:

• Broadband for all to ensure Digital Sovereignty.
• Creating four million additional jobs in the Digital Communications sector.
• Enhancing the contribution of the Digital Communications sector to 8% of India’s GDP from ~ 6% in 2017
• Propelling India to the Top 50 Nations in the ICT Development Index of the International Telecommunication Union (ITU) from 134 in 2017.
• Enhancing India’s contribution to Global Value Chains.

Specific Aims of the NDCP Policy 2018:

• • Provide universal broadband connectivity at 50 Mbps to every citizen;
  • Provide 1 Gbps connectivity to all Gram Panchayats by 2020 and 10 Gbps by 2022;
  • Attract investments of USD 100 billion in the Digital Communications Sector;
  • Train one million manpower for building New Age Skill;
  • Expand IoT ecosystem to 5 billion connected devices,
  • Establish a comprehensive data protection regime for digital communications that safeguards the privacy, autonomy and choice of individuals.

Strategy:

The policy also suggests the strategy by which these aims are to be achieved.

• Establishment of a National Digital Grid by creating a National Fibre Authority;
• Establishing Common Service Ducts and utility corridors in all new city and highway road projects;
• Creating a collaborative institutional mechanism between Centre, States and Local Bodies for Common Rights of Way, standardization of costs and timelines;
• Removal of barriers to approvals; and
• Facilitating development of Open Access Next Generation Networks

Conclusion:

With continuous expansion of India as a knowledge driven economy, ‘customer focused’ and ‘application driven’ policy for the Indian Telecom Sector, which can form the main pillar of Digital India has become the need of the hour.