Regulator Trai on Thursday rejected argument that reduction in mobile call connection rates has any linkage with financial stress in the telecom sector, saying the charges are not meant for making profit.
“To my understanding there is no connection between stress in the telecom sector and IUC rates because rates cannot be profit vertical for any company. You get compensated for whatever work you do. Whether you are handling one call or 10 calls, you are not being paid less or being paid more. You don’t make a loss or profit,” Sharma said.
He was responding to a query over criticism over IUC reduction at the India Mobile Congress by Idea Cellular Managing Director and CEO Himanshu Kapania.
Mobile companies currently charge 14 paise a minute for allowing a domestic call from a rival operator to terminate on their network. This charge, called Interconnection Usage Charge or IUC, will be 6 paise per minute from October 1, 2017.
Kapania had said recent market developments have drastically altered industry dynamics, resulting in the sector passing through a phase of severe “financial and mental stress”.
Terming the regulatory and financial issues being faced by the sector as the “elephant in the room that no one is talking about”, Kapania flagged the recent cut in IUC, firm spectrum prices and high levies like licence fee and GST as big constraints.
He said that the reductions in call connect charges will further “deplete” the industry of investible funds.
Sharma also rejected the allegation of giving preference to only Internet protocol (IP) based networks.
“We are essentially nudging the network to go to IP which is much more efficient,” Sharma said.